WEBVTT

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<v ->Resuming the cross of Mr. Gorman by Mr. Weisman.</v>

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<v ->Thank you, Your Honor.</v>

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Mr. Gorman, were you a witness

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in the utility slash cost of capital proceeding?

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<v Michael>Yes.</v>

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<v Mr. Weisman>In that proceeding, did you recommend</v>

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that the Commission adjust

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Edison's cost of debt

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to reflect what his credit rating would have been

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had there not been the Thomas and Woolsey fires?

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<v ->I didn't take a position on the company's</v>

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cost of debt in the last rent case,

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so I did not make the recommendation.

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<v Mr. Weisman>Is your opinion, is that</v>

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the kind of exercise the Commission should do

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for Edison in the future?

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<v ->No, in my opinion, the adjustments,</v>

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if I would make the cost of debt,

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would reflect eliminating

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costs that should not be included in setting rates.

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That would include costs that are a result of imprudence

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or costs that are unreasonable.

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<v Mr. Weisman>So to determine what Edison's</v>

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cost of debt is authorized in the future,

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must the Commission determine

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the prudence of Edison's activities relative

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to the Thomas and Woolsey fires.

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<v ->Well I need to review what your embedded</v>

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cost of debt will be the next time I'm involved

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in a cost of capital proceeding for PG&E.

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And in doing that, if there's any specific bond issue

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where the cost of debt is unreasonable

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or reflects imprudent costs, then I would make an adjustment

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and explain what that adjustment is based on.

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To the extent I was recommending an adjustment

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on either of those factors, then I would explain

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to the Commission why those factors are relevant

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in adopting my proposed adjustment.

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<v ->So let me clarify my question.</v>

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The question was not about PG&E.

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I'm just trying to understand your methodology

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so that the Commission can evaluate it.

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So, in a future cost of capital proceeding,

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let me take a step back,

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your recommendation is for PG&E,

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the Commission should compare

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the actual cost of debt

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to what it would have been absent a bankruptcy

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and fires that may have been caused by imprudence, right?

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<v ->We've gone back and forth on that several times</v>

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and my recommendation would be that

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to the extent there any amount

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of interest expense that was increased

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as a result of imprudence or unreasonable costs

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should not be included in cost of service for setting rates,

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to the extent the company's

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cost of debt reflects higher costs

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associated with its bankruptcy filing

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or the wildfire damage costs than

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in that proceeding, if I made such an adjustment,

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I would offer to the Commission, explain why I'm making it

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and show support for my adjustment.

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<v ->And my question is, would you recommend</v>

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that the Commission apply the same methodology

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to evaluate Edison's cost of debt?

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<v ->I think in every rate proceeding,</v>

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the Commission should only include

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prudent and reasonable costs in the development

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of utilities revenue requirement

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in designing proper rates for retail customers.

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So to the extent any of the utility's costs include

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costs that are the result of imprudent management

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or costs that are unreasonable,

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I think they should be eliminated

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from the utility's revenue requirement.

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<v ->And specifically to the extent costs of debt</v>

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are impacted by fire claims costs

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that may have resulted from imprudence,

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that should be an adjustment to the cost of debt.

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That's your position, right?

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<v ->That very well may be an adjustment</v>

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that I might propose in the future.

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<v ->Okay,</v>

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(clears throat)

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has the Commission,

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has this Commission ever in the past

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adjusted utility's cost of debt

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based on

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the impact of imprudence on that cost of debt?

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<v ->I haven't evaluated the Commission's adjustments</v>

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to cost of debt in setting rates.

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<v ->So as far as you know,</v>

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this would be an unprecedented approach for this Commission.

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<v Man>Objection.</v>

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<v Judge>Sustained, rephrase.</v>

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<v ->Can you cite any precedent for the Commission</v>

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to adjust the actual cost of debt

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based on the impact of imprudence?

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<v Judge>Overruled.</v>

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<v ->I think the standard for setting a rate of return,</v>

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which balances the interest between

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investors and rate payers,

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is established by the

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Holcomb Bluefield Supreme Court decisions.

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And in that, the rate of return should reflect

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efficient and reasonable management of the utility,

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and produce a rate of return

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that provides fare compensation

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and supports just and reasonable rates.

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So I think that would be the standard

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under which I would recommend any adjustments

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to the company's embedded debt cost in a future rent case.

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<v ->So, I'll just move on.</v>

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<v Judge>Thank you.</v>

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<v ->Thank you.</v>

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Would you,

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do you have a recommendation for when this comparison

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that you suggest would end?

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<v ->Well it would depend on the facts and circumstances</v>

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in each of the company's cost of capital proceedings.

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But I imagine it would end when there's no

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reason to believe or no one takes issue

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with whether or not there's cost in company,

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including the company's cost of service,

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that should be excluded from cost of service

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on the base of imprudence or unreasonableness.

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<v ->And how would we know?</v>

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<v ->You would read party's testimony in reviewing</v>

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the company's filing and

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establishing what is an appropriate

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revenue requirement for the utility.

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<v ->That would be a litigated issue.</v>

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<v ->It would be a litigated issue</v>

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and to the extent they're recurring issues,

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the Commission would rule one way or another

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and I presume that in such grim rate cases,

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the, either the utility or the parties

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would accept that Commission filing.

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<v ->Have a recommendation for an outside date,</v>

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defined end date for this comparison?

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<v ->I think protecting customers is an ongoing obligation</v>

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of the Commissions and parties to the case I think

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will advocate on behalf of customers

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and the utility investors in all rate cases.

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<v ->Now you aren't proposing a specific method</v>

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by which the Commission would conduct this comparison

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of actual financing costs

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to the hypothetical costs, correct?

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<v ->I haven't proposed an adjustment at this time, yet,</v>

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no, but I'm trying to be clear that to the extent

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the costs are based on imprudent management decisions

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or the costs are unreasonable,

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they should be excluded from setting rates.

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<v ->Right but you haven't proposed</v>

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a specific method to implement that

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in your testimony here, right?

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<v ->Not in this case, no.</v>

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<v ->And would you envision the Commission decision</v>

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in this case establishing such a methodology?

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<v ->I would hope the Commission would agree</v>

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that to the extent parties can demonstrate

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any cost the company incurs as a result

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of imprudent management or unreasonable expense,

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that they would not be included in revenue requirement

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for setting retail customer's rates.

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<v ->And the Commission would implement that in the future.</v>

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<v ->I don't think it's a new standard</v>

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and I believe the Commission would implement that standard

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going forward, as they have in the past.

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<v ->We disagree about whether it's a new standard,</v>

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but let me ask you this,

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will investors and lenders be concerned

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about how this methodology will be implemented?

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<v ->I believe it is a standard that is used nationwide,</v>

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as far as I'm concerned.

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And as long as there's clear description

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of the utility's cost that is found to be

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either imprudent or unreasonable

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and excluded from recovery that,

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and the Commission acts in a

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predictable and consistent manner going forward.

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While the investment community may not like the adjustment,

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I think they'll understand the principles of setting rates

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and will act accordingly.

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<v ->Are you saying nationwide, every Commission in the country</v>

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adjusts the actual recorded cost of debt

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based on a comparison to what that cost would have been

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had the utility not acted imprudently?

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<v ->You keep saying that but I keep telling you</v>

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that costs that are either the result

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of imprudent management decisions

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or costs that are unreasonable are excluded

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from being recovered by the utility.

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<v Judge>So Mr. Weisman, I think I understand</v>

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your line of questioning that,

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what you're trying to establish with your questions.

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I believe I understand the witness's answers

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and not agreeing with your line of questioning

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and certainly parties are free to raise this in briefs.

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I don't think you're going to get much farther

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on this particular approach.

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If you have other areas you wish to do cross-examine on,

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please do them.

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<v ->Thank you, Your Honor.</v>

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Is the manner in which the Commission implements

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this comparison concept,

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does that create risks for investors and lenders?

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<v ->Well, risk for investors relate to both</v>

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Commission practices and the strength of management.

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So, investment risk is a factor that investors will see.

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Disallowances of cost by the regulatory Commissions

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may trigger responses from investors

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to the extent that investor response means they

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replace ineffective management with effective management,

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then investors' risk can be mitigated going forward.

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But it's part of the process.

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Where the balance of interest is preserved

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and rates are just and reasonable

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and the utility is providing them an opportunity

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to earn a fair rate of return

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on prudent and reasonable cost items, come,

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then I believe the rate-making balance is achieved

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and I think that's a similar balance

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that every utility is exposed to.

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<v ->So let me clarify my question.</v>

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I'm not talking about the risk imprudence generically,

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I'm talking about the way in which

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the Commission would implement your concept

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of comparing the actual cost of debt

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to this hypothetical alternative.

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Does that create risk?

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<v ->The way the Commission would implement it</v>

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would approve an overall rate of return

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that is fair and reasonable.

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Which means it provides fair compensation

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to the utility and supports just and reasonable rates

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and that would include a rate of return

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that does not allow the utility to recover

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the costs that we've been discussing,

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imprudent or unreasonable.

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<v ->We talked before about the debt cost savings</v>

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that result from the noteholder RSA, right?

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<v ->Yes.</v>

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<v ->And I think you agreed that those savings</v>

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were realized because of the bankruptcy, right.

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<v ->The ability to--</v>

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I haven't confirmed it, but the utility's representation

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is they could not have implemented an economic refinancing

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of those securities absent the bankruptcy.

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So under, if that is accurate, then,

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then the bankruptcy did produce savings for those,

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about $6.2 billion of high coupon debt.

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<v ->And so should PG&E recover the direct costs</v>

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PG&E necessarily incurred in order

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to accomplish that outcome?

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<v ->PG&E should recover reasonable and prudent costs,</v>

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which would include the reasonable and prudent costs

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of those refinanced, high coupon debt instruments.

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<v ->Including the fees associated with that refinancing?</v>

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<v ->To the extent the company can demonstrate</v>

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that those savings were only gained

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as a result of costs, then if those costs

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are reasonable and prudent,

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then that may be appropriate for consideration.

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<v ->Okay, turn to page 25, line 10 of your testimony.</v>

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<v ->I'm there.</v>

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<v ->And you're speaking here about a paydown</v>

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of the temporary utility debt.

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<v ->Yes.</v>

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<v ->To protect the utility's financial integrity, right?</v>

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<v ->Correct.</v>

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<v ->And do you understand that the company's plan</v>

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is to use the cashflow from the net operating losses

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to pay down the temporary utility debt

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if securitization is not approved?

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<v ->That is my understanding, yes.</v>

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With the clear stated intent that the cost

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of that debt will not be included in revenue requirement

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and that the debt service would be paid for through

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those tax savings.

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<v ->Okay, and</v>

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do you oppose that plan?

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<v ->I have not opposed that.</v>

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But I have requested or recommended a Commission

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that they ask for some transparency

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to ensure that that intent is followed through

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and the financial integrity of the utility

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is restored as quickly as possible.

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It's this debt that is issued that is not used

00:13:57.330 --> 00:13:59.230
to invest in utility plant and equipment

00:13:59.230 --> 00:14:01.830
increases the overall leverage of the utility

00:14:01.830 --> 00:14:04.450
and erodes the company's credit metrics.

00:14:04.450 --> 00:14:06.370
And the faster that debt is paid off,

00:14:06.370 --> 00:14:09.290
the faster those credit metrics will recover.

00:14:09.290 --> 00:14:13.290
<v ->Right, so paying off the debt reduces leverage, right?</v>

00:14:13.290 --> 00:14:14.123
<v ->Yes.</v>

00:14:14.123 --> 00:14:15.347
<v ->And that's a beneficial outcome.</v>

00:14:17.000 --> 00:14:19.490
<v ->It is a beneficial outcome to both rate payers</v>

00:14:19.490 --> 00:14:20.620
and investors.

00:14:20.620 --> 00:14:21.453
<v ->Right, so,</v>

00:14:26.956 --> 00:14:30.370
okay, so regardless of securitization,

00:14:30.370 --> 00:14:32.630
PG&E will use the net operating losses

00:14:32.630 --> 00:14:35.653
to paydown the temporary utility debt.

00:14:38.470 --> 00:14:41.120
So those net operating losses are an

00:14:41.120 --> 00:14:42.893
asset of the company, correct?

00:14:44.900 --> 00:14:47.710
<v ->If they, yeah, they will use them to reduce</v>

00:14:47.710 --> 00:14:49.770
the amount of income tax they will ultimately pay

00:14:49.770 --> 00:14:51.690
to government taxing authorities, yes.

00:14:51.690 --> 00:14:53.600
<v ->So it's a shareholder asset.</v>

00:14:53.600 --> 00:14:56.220
<v ->The shareholders incurred the loss, the write-off,</v>

00:14:56.220 --> 00:14:58.240
and they are entitled to the full benefit

00:14:58.240 --> 00:15:00.860
of the taxes, except for their obligation

00:15:00.860 --> 00:15:03.230
to pay off this temporary utility debt.

00:15:03.230 --> 00:15:06.890
<v ->Right, so just from an economic point of view,</v>

00:15:06.890 --> 00:15:10.290
we look at PG&E, these net operating losses

00:15:10.290 --> 00:15:12.190
are not on the balance sheet, correct?

00:15:14.610 --> 00:15:16.610
<v ->Well, I don't confirm that they're recording it</v>

00:15:16.610 --> 00:15:21.100
at the corp level but I'll accept that, subject to check.

00:15:21.100 --> 00:15:23.823
<v ->But they do have economic value, correct?</v>

00:15:25.210 --> 00:15:27.643
<v ->The NOL asset?</v>
<v ->Yes.</v>

00:15:27.643 --> 00:15:28.476
<v ->Yes.</v>
<v ->Okay.</v>

00:15:28.476 --> 00:15:30.913
And lenders would recognize it as such, correct?

00:15:32.000 --> 00:15:34.973
<v ->It will strengthen the utility's cashflows over time, yes.</v>

00:15:44.311 --> 00:15:45.144
<v ->Okay,</v>

00:15:46.140 --> 00:15:48.963
please take a look at page 25 of your testimony.

00:15:54.004 --> 00:15:55.004
<v ->I'm there.</v>

00:16:03.010 --> 00:16:05.960
<v ->Here, we're on to my favorite topic of capital structure.</v>

00:16:07.240 --> 00:16:11.510
Okay, so I understand here that you agree

00:16:11.510 --> 00:16:14.320
with the company about the principle

00:16:14.320 --> 00:16:17.100
that the purpose of rate making capital structure

00:16:17.100 --> 00:16:20.820
is to accurately reflect the proportion

00:16:20.820 --> 00:16:24.023
of equity and debt used to finance rate base, correct?

00:16:29.175 --> 00:16:31.280
<v ->Well I think it's more complicated than that</v>

00:16:31.280 --> 00:16:34.450
but I think the company's intent in their filing

00:16:34.450 --> 00:16:36.970
and the restructuring plan is that the rate making

00:16:36.970 --> 00:16:40.450
capital structure will reflect the capital used

00:16:40.450 --> 00:16:43.120
to support investment and utility planning equipment

00:16:43.120 --> 00:16:45.093
and that temporary debt would be,

00:16:46.017 --> 00:16:47.330
well they didn't specifically say this,

00:16:47.330 --> 00:16:48.800
but their projections indicate that

00:16:48.800 --> 00:16:51.300
they're gonna pay it off as quickly as possible.

00:16:51.300 --> 00:16:56.150
So in this case, I believe that's a reasonable objective.

00:16:56.150 --> 00:16:58.150
And the reason I want to limit it to this case

00:16:58.150 --> 00:17:00.490
is because there can be other cases

00:17:00.490 --> 00:17:03.470
where the utility is owned by a parent company

00:17:03.470 --> 00:17:05.910
that uses what's generally referred to

00:17:05.910 --> 00:17:07.990
as a double leverage kind of standard.

00:17:07.990 --> 00:17:09.570
Parent company issues a lot of debt

00:17:09.570 --> 00:17:11.900
to make equity infusions in the utility,

00:17:11.900 --> 00:17:13.860
fattens up the utility's equity ratio

00:17:13.860 --> 00:17:17.010
but the credit rating still of the utility company

00:17:17.010 --> 00:17:19.780
does not reflect that mix of debt

00:17:19.780 --> 00:17:21.650
and equity in the cap structure.

00:17:21.650 --> 00:17:23.620
So it can be more complicated.

00:17:23.620 --> 00:17:26.390
So this testimony reflects what PG&E's

00:17:26.390 --> 00:17:28.950
restructuring plan suggest in this case.

00:17:28.950 --> 00:17:32.400
<v ->Okay, so for purposes of this case,</v>

00:17:32.400 --> 00:17:35.450
you would agree that the rate making capital structure

00:17:35.450 --> 00:17:39.810
should reflect the proportion of equity and debt

00:17:39.810 --> 00:17:42.600
used to finance PG&E's rate base?

00:17:42.600 --> 00:17:45.010
<v ->I think it should and I think that</v>

00:17:45.010 --> 00:17:48.130
commitment by the company should be part

00:17:48.130 --> 00:17:50.770
of the conditions under which their restructuring plan

00:17:50.770 --> 00:17:52.890
is adopted with commitments

00:17:52.890 --> 00:17:57.510
and the intent is verifiable that the debt

00:17:58.540 --> 00:18:01.150
supporting investments other than rate-based investments

00:18:01.150 --> 00:18:03.100
will be paid off as quickly as possible.

00:18:03.100 --> 00:18:06.770
<v ->Right, okay, so now, I'd like to direct your attention</v>

00:18:06.770 --> 00:18:11.663
to page 25, line 19, through page 26, line two.

00:18:13.540 --> 00:18:14.373
<v ->I'm there.</v>

00:18:15.580 --> 00:18:18.453
<v ->So, here you're referring to the issuance</v>

00:18:18.453 --> 00:18:23.150
of 6.75 billion of stock that will be paid

00:18:23.150 --> 00:18:25.470
to the Fire Victim Trust, correct?

00:18:25.470 --> 00:18:26.730
<v ->Yes.</v>

00:18:26.730 --> 00:18:30.930
<v ->And this is the only area that you indicate</v>

00:18:30.930 --> 00:18:33.420
a potential disagreement with the company's

00:18:33.420 --> 00:18:36.320
proposal for adjustment of the capital structure, right?

00:18:36.320 --> 00:18:37.890
<v ->I don't know if it's a disagreement</v>

00:18:37.890 --> 00:18:40.650
or a need for clarification by the company's file.

00:18:40.650 --> 00:18:42.600
<v ->Okay, but that's the only one, right?</v>

00:18:43.540 --> 00:18:45.640
<v ->Well, there was two aspects of the common equity</v>

00:18:45.640 --> 00:18:48.310
goes into the rate making capital structure.

00:18:48.310 --> 00:18:50.840
The first one is if they do use equity

00:18:50.840 --> 00:18:53.740
capital making contributions to the Victim Trust,

00:18:53.740 --> 00:18:55.410
then that would be capital that wouldn't be used

00:18:55.410 --> 00:18:58.500
to support rate-based investments.

00:18:58.500 --> 00:19:02.540
And the second one is reversing write-offs

00:19:02.540 --> 00:19:04.500
for contributions to the trust or paying

00:19:04.500 --> 00:19:06.660
for wildfire damage claims

00:19:06.660 --> 00:19:09.730
and measuring the amount of equity that was,

00:19:09.730 --> 00:19:11.910
if those are non-cash write-offs,

00:19:11.910 --> 00:19:13.750
measuring the amount of equity that is,

00:19:13.750 --> 00:19:17.410
was actually used to invest in utility planning equipment.

00:19:17.410 --> 00:19:20.773
With respect to the $6.75 billion,

00:19:22.699 --> 00:19:24.680
that does appear to be equity issued

00:19:24.680 --> 00:19:26.530
at the parent company level and it may or may not

00:19:26.530 --> 00:19:29.740
have implications of the capital at the utility level.

00:19:29.740 --> 00:19:32.460
But to the extent it does, then that should be considered,

00:19:32.460 --> 00:19:36.210
informing the appropriate utility rate making cap structure.

00:19:36.210 --> 00:19:39.630
And with respect to the write-offs of contributions

00:19:39.630 --> 00:19:42.523
to the trust or Wildfire Victim Funds,

00:19:43.982 --> 00:19:46.590
to the extent, it's non-cash write-off and it's funded

00:19:46.590 --> 00:19:49.730
by other vehicles, such as the temporary utility debt.

00:19:49.730 --> 00:19:52.560
If the utility follows through with paying off that debt

00:19:52.560 --> 00:19:55.690
as quickly as possible, then I wouldn't oppose

00:19:55.690 --> 00:19:57.970
reversing those write-offs,

00:19:57.970 --> 00:19:59.870
if there's a verifiable commitment

00:19:59.870 --> 00:20:03.450
by the utility to pay out that temporary debt

00:20:03.450 --> 00:20:06.130
as quickly as possible and to retain equity

00:20:06.130 --> 00:20:09.133
in the utility company to kind of build it back up to,

00:20:10.500 --> 00:20:14.010
to replenish the amount of common equity actually available

00:20:14.010 --> 00:20:16.780
to invest in utility planning equipment.

00:20:16.780 --> 00:20:18.680
<v ->Okay, I think we're in agreement</v>

00:20:18.680 --> 00:20:20.220
but that was kind of a long answer.

00:20:20.220 --> 00:20:22.760
So let me try to break it down to make sure I understand.

00:20:22.760 --> 00:20:26.090
So let's start with the 6.75 billion of stock.

00:20:26.090 --> 00:20:27.300
Now as you say, that's issued

00:20:27.300 --> 00:20:31.535
by the parent company, correct?

00:20:31.535 --> 00:20:34.120
<v ->It was noted as a parent--</v>

00:20:34.120 --> 00:20:35.560
Well it's issue of public stock

00:20:35.560 --> 00:20:37.040
so it would be at the parent company, yes.

00:20:37.040 --> 00:20:40.250
<v ->Right, and it's paid directly to the Fire Victim Trust,</v>

00:20:40.250 --> 00:20:41.250
correct?
<v ->Correct.</v>

00:20:41.250 --> 00:20:43.930
<v ->So it's never going down into the utility, right?</v>

00:20:43.930 --> 00:20:45.580
<v ->Well, the parent company makes equity,</v>

00:20:45.580 --> 00:20:48.130
or capital contributions to the utilities

00:20:48.130 --> 00:20:50.640
so I wouldn't think it would somehow

00:20:50.640 --> 00:20:52.420
work its way into those contributions,

00:20:52.420 --> 00:20:54.550
but I haven't really looked at that in detail.

00:20:54.550 --> 00:20:55.383
<v ->Would or would not?</v>

00:20:55.383 --> 00:20:56.216
I didn't hear you.

00:20:56.216 --> 00:20:59.280
<v ->I would think it would not impact equity,</v>

00:20:59.280 --> 00:21:02.070
capital contributions from the parent to the utility

00:21:02.070 --> 00:21:04.077
but I haven't had the time to really review

00:21:04.077 --> 00:21:07.610
what those capital contributions between

00:21:07.610 --> 00:21:10.440
the parent company and the utility company will be.

00:21:10.440 --> 00:21:11.273
<v ->Okay,</v>

00:21:12.340 --> 00:21:16.663
so, let's just assume, for purposes of my question,

00:21:16.663 --> 00:21:18.380
that the stock is paid directly

00:21:18.380 --> 00:21:19.780
from the parent to the trust,

00:21:19.780 --> 00:21:21.030
never goes through the utility.

00:21:21.030 --> 00:21:22.070
Do you have that assumption in mind?

00:21:22.070 --> 00:21:22.940
<v ->I do.</v>

00:21:22.940 --> 00:21:27.710
<v ->So, then, the consequence of that payment</v>

00:21:28.820 --> 00:21:33.820
is that the liability on the utility's balance sheet

00:21:33.930 --> 00:21:37.493
associated with the claims would be extinguished, correct?

00:21:39.100 --> 00:21:42.010
<v ->I haven't confirmed that but I would presume it would be.</v>

00:21:42.010 --> 00:21:43.410
<v ->Actually, let me take a step back.</v>

00:21:43.410 --> 00:21:48.150
So PG&E has taken non-cash charges

00:21:48.150 --> 00:21:50.440
associated with the fire claims, correct?

00:21:50.440 --> 00:21:52.650
<v ->I haven't reviewed all of the accounting of it, yes,</v>

00:21:52.650 --> 00:21:54.750
but it's my understanding that

00:21:54.750 --> 00:21:57.380
those are some of the transactions that will be recorded.

00:21:57.380 --> 00:21:58.213
<v ->Or have been.</v>

00:21:59.110 --> 00:22:00.210
<v ->I haven't confirmed that.</v>

00:22:00.210 --> 00:22:01.543
<v ->Okay, so,</v>

00:22:06.050 --> 00:22:09.110
when PG&E takes a charge, a non-cash charge,

00:22:09.110 --> 00:22:12.800
that creates a liability on the balance sheet, right?

00:22:12.800 --> 00:22:13.633
<v ->It does.</v>

00:22:13.633 --> 00:22:16.640
<v ->Okay, so and the charge, again, is associated</v>

00:22:16.640 --> 00:22:20.353
with a contingent obligation to pay claims, correct?

00:22:22.170 --> 00:22:23.003
<v ->Can we go back?</v>

00:22:23.003 --> 00:22:26.710
I mean if they record a charge that hasn't yet been paid,

00:22:26.710 --> 00:22:27.683
I mean they can,

00:22:29.786 --> 00:22:32.480
it would be recorded against common equity

00:22:32.480 --> 00:22:34.890
on the liability side, common equity would decrease

00:22:34.890 --> 00:22:37.020
and the assets really wouldn't change.

00:22:37.020 --> 00:22:38.230
<v ->Precisely.</v>
<v ->The cash is still on</v>

00:22:38.230 --> 00:22:39.490
the utility's balance sheet.

00:22:39.490 --> 00:22:42.690
<v ->That's what we mean by a non-cash charge, right.</v>

00:22:42.690 --> 00:22:46.110
<v ->Yeah, but I didn't agree specifically</v>

00:22:46.110 --> 00:22:48.810
with the recording of a liability as you described it.

00:22:48.810 --> 00:22:50.120
That's what I was trying to make sure

00:22:50.120 --> 00:22:52.260
I was on the same page with you on.

00:22:52.260 --> 00:22:56.940
<v ->So the charge, this non-cash charge associated</v>

00:22:56.940 --> 00:22:58.930
with the contingent obligation to pay the claims

00:22:58.930 --> 00:23:00.943
reduces common equity, correct?

00:23:01.780 --> 00:23:05.183
<v ->Through recording of the operating income statement,</v>

00:23:05.183 --> 00:23:07.050
will reduce retained earnings, yes.

00:23:07.050 --> 00:23:12.050
<v ->Yeah, okay and then once the claims are paid,</v>

00:23:12.590 --> 00:23:17.590
as part of the plan, that extinguishes the charge.

00:23:22.060 --> 00:23:23.550
Correct?
<v ->Why it would, yes.</v>

00:23:23.550 --> 00:23:27.710
<v ->So therefore, the equity is restored</v>

00:23:27.710 --> 00:23:30.413
to where it was before the charges were taken, right?

00:23:31.440 --> 00:23:35.280
<v ->Well cash would go down on the utility's balance sheet.</v>

00:23:35.280 --> 00:23:39.000
So the assets would be impacted by the payment of the claim.

00:23:39.000 --> 00:23:42.210
So the liability side would also have to be adjusted

00:23:42.210 --> 00:23:44.600
to reflect the shrinking of the assets.

00:23:44.600 --> 00:23:45.840
<v ->It depends who pays the claims.</v>

00:23:45.840 --> 00:23:48.390
If the parent pays the claims, that's not the case.

00:23:52.460 --> 00:23:55.300
<v ->And depending on whether or not the utility--</v>

00:23:55.300 --> 00:23:57.740
Yeah, I haven't looked at the accounting for this.

00:23:57.740 --> 00:23:58.690
<v ->Okay.</v>
<v ->So, I mean</v>

00:23:58.690 --> 00:24:00.040
there is a possibility that

00:24:01.810 --> 00:24:03.430
the common equity could be restored

00:24:03.430 --> 00:24:05.050
in the manner that you're describing.

00:24:05.050 --> 00:24:08.520
But I have not verified that based on the company's

00:24:08.520 --> 00:24:09.460
accounting records.

00:24:09.460 --> 00:24:11.150
<v ->Okay, so let me make it clear,</v>

00:24:11.150 --> 00:24:14.530
except for the $6 billion of temporary utility debt,

00:24:14.530 --> 00:24:18.520
which is being taken out at the utility level,

00:24:18.520 --> 00:24:22.260
are you agree that that amount should be removed

00:24:22.260 --> 00:24:23.710
from the rate making capital structure,

00:24:23.710 --> 00:24:24.780
assuming that there's a plan

00:24:24.780 --> 00:24:26.530
to pay it down properly, correct?

00:24:26.530 --> 00:24:28.800
<v ->If there's a verifiable plan to pay it off</v>

00:24:28.800 --> 00:24:30.590
on an accelerated basis, yes.

00:24:34.310 --> 00:24:37.890
<v ->Okay, are you recommending that the Commission</v>

00:24:40.020 --> 00:24:42.773
not approve PG&E's plan?

00:24:47.218 --> 00:24:50.720
<v ->I've been recommending that the company's plan</v>

00:24:50.720 --> 00:24:54.210
should be modified with certain contingent adjustments

00:24:56.080 --> 00:24:56.913
and

00:24:59.120 --> 00:25:01.760
I've not, that's as much as I've recommended.

00:25:01.760 --> 00:25:04.120
That certain aspects of the plan need to have

00:25:04.120 --> 00:25:07.150
certain commitments from the utility,

00:25:07.150 --> 00:25:10.570
including verifiable objectives with metrics

00:25:10.570 --> 00:25:12.940
to measure my measured utility's

00:25:14.500 --> 00:25:15.333
actual

00:25:17.010 --> 00:25:18.700
efforts to actually achieve

00:25:18.700 --> 00:25:20.700
the financial measurements in their plan

00:25:21.730 --> 00:25:25.390
and ensure that rates are just and reasonable

00:25:25.390 --> 00:25:27.610
that costs that shouldn't be paid by customers

00:25:27.610 --> 00:25:28.880
aren't paid by customers

00:25:29.850 --> 00:25:32.580
and that the Commission that does approve the plan,

00:25:32.580 --> 00:25:36.310
that there's certain commitments, further commitments

00:25:36.310 --> 00:25:39.343
the utility should make in receiving that approval.

00:25:40.700 --> 00:25:42.830
<v ->Subject to those recommendations</v>

00:25:42.830 --> 00:25:45.110
for additional conditions,

00:25:45.110 --> 00:25:48.410
are you recommending that the Commission finds

00:25:48.410 --> 00:25:50.773
that the plan complies with AB 1054?

00:25:53.380 --> 00:25:55.600
<v ->I don't know if I've gone that far.</v>

00:25:55.600 --> 00:25:58.350
I think that will be a position that will be advocated

00:25:58.350 --> 00:26:00.990
by TURN and EPUC and IS.

00:26:00.990 --> 00:26:03.740
My testimony simply outlines

00:26:03.740 --> 00:26:06.600
improvements to the plan necessary to ensure that

00:26:06.600 --> 00:26:08.920
customers are protected under the plan.

00:26:08.920 --> 00:26:10.473
<v ->Thank you, that's all I have here.</v>

00:26:11.440 --> 00:26:13.330
<v Judge>Thank you, Mr. Weisman.</v>

00:26:13.330 --> 00:26:14.163
Mr. Bloom.

00:26:15.920 --> 00:26:17.120
<v ->Thank you, Your Honor.</v>

00:26:18.290 --> 00:26:20.240
Mr. Gorman, I'm Jerry Bloom and I'm here

00:26:20.240 --> 00:26:22.440
on behalf of the Tort Claimant's Committee.

00:26:22.440 --> 00:26:23.663
<v Mr. Gorman>Good afternoon.</v>

00:26:26.685 --> 00:26:28.410
<v Mr. Bloom>On page two of your testimony,</v>

00:26:28.410 --> 00:26:30.880
you state that the focus,

00:26:30.880 --> 00:26:33.160
the need to focus on the conditions

00:26:33.160 --> 00:26:37.360
that may exist at the moment PG&E emerges from bankruptcy

00:26:37.360 --> 00:26:41.290
but also a need to take actions to sustain, oversee

00:26:41.290 --> 00:26:44.460
audit and support the ongoing interest of rate payers.

00:26:44.460 --> 00:26:45.430
Is that correct?

00:26:45.430 --> 00:26:46.640
<v ->It is.</v>

00:26:46.640 --> 00:26:48.640
<v ->And this plays actually into just</v>

00:26:48.640 --> 00:26:50.500
the last line of questions

00:26:50.500 --> 00:26:53.893
that you were just discussing with Mr. Weisman.

00:26:54.730 --> 00:26:57.510
We have before us two different time periods.

00:26:57.510 --> 00:27:00.840
There is a, if you will, a snapshot,

00:27:00.840 --> 00:27:03.870
that I discussed as well with Mr. Beech this morning,

00:27:03.870 --> 00:27:06.500
where the Commission needs to make a determination

00:27:06.500 --> 00:27:10.320
in order to reach the goals of 1054 to have the company

00:27:10.320 --> 00:27:12.410
emerge from bankruptcy by the summer

00:27:12.410 --> 00:27:15.750
and get into the wildfire insurance plan and so forth.

00:27:15.750 --> 00:27:18.610
So there's a necessarily a snapshot

00:27:18.610 --> 00:27:20.930
that has to be taken as to the conditions

00:27:20.930 --> 00:27:23.360
and what's been presented in the plan at this point.

00:27:23.360 --> 00:27:24.740
Is that correct?

00:27:24.740 --> 00:27:26.390
<v ->Generally, I agree.</v>

00:27:26.390 --> 00:27:31.000
<v ->Okay, and over the longer term,</v>

00:27:31.000 --> 00:27:35.000
then we'll be looking at, this is what you've called on,

00:27:35.000 --> 00:27:36.410
as you just said in your last answer,

00:27:36.410 --> 00:27:39.530
a number of metrics and other things that may,

00:27:39.530 --> 00:27:42.880
as the plan develops, as the restructuring plan gets,

00:27:42.880 --> 00:27:45.690
gets introduced and developed and introduced

00:27:45.690 --> 00:27:48.040
at the Commission, the cost of capital proceedings,

00:27:48.040 --> 00:27:50.370
things that we've been talking about today.

00:27:50.370 --> 00:27:52.670
As those things happen, there may be adjustments

00:27:52.670 --> 00:27:56.447
or things that need to be made post-approval of the plan

00:27:56.447 --> 00:27:58.290
and emergence from bankruptcy.

00:27:58.290 --> 00:28:00.260
<v ->Yes, there needs to be part of the plan</v>

00:28:00.260 --> 00:28:03.790
that achieves certain performance by the utility,

00:28:03.790 --> 00:28:06.860
including strengthening its financial position

00:28:08.730 --> 00:28:10.080
and ensuring the customer--

00:28:10.080 --> 00:28:12.190
And doing so without asking customers

00:28:12.190 --> 00:28:14.940
to pay costs that they shouldn't be asked to pay.

00:28:14.940 --> 00:28:18.280
<v ->Okay, you also state in your testimony</v>

00:28:18.280 --> 00:28:20.110
that the interest that you alluded to,

00:28:20.110 --> 00:28:22.510
the ongoing interest to rate payers,

00:28:22.510 --> 00:28:26.080
includes statutory protections for rate payers,

00:28:26.080 --> 00:28:27.800
is that correct?
<v ->Yes.</v>

00:28:27.800 --> 00:28:31.670
<v ->And in your testimony, you appeared to focus</v>

00:28:31.670 --> 00:28:35.170
heavily on the rates themselves,

00:28:35.170 --> 00:28:37.660
which is certainly of interest to rate payers.

00:28:37.660 --> 00:28:40.210
Would you agree that reliability and safety

00:28:40.210 --> 00:28:42.160
are also of interest to rate payers?

00:28:42.160 --> 00:28:43.240
<v ->Absolutely.</v>

00:28:43.240 --> 00:28:46.000
When I focus on rates, I'm talking about service quality

00:28:46.000 --> 00:28:47.280
and reliability as well as

00:28:47.280 --> 00:28:49.870
safety to employees and the public.

00:28:49.870 --> 00:28:50.950
<v ->Excellent.</v>

00:28:50.950 --> 00:28:54.090
And would you agree that the fire victims

00:28:54.090 --> 00:28:56.470
are also similarly situated rate payers

00:28:56.470 --> 00:29:00.440
with interests not only in rates but also

00:29:00.440 --> 00:29:02.403
particularly in reliability and safety?

00:29:03.730 --> 00:29:05.680
<v ->I can't speak for them, but I would presume</v>

00:29:05.680 --> 00:29:08.140
that that's an accurate statement.

00:29:08.140 --> 00:29:11.873
<v ->Okay, I'd like to focus on two of your recommendations.</v>

00:29:12.890 --> 00:29:15.420
The eighth recommendation that you set forth

00:29:15.420 --> 00:29:19.010
on page six, you state that the plan of reorganization

00:29:19.010 --> 00:29:21.990
does not include concrete standards or obligations

00:29:21.990 --> 00:29:26.990
to avoid, to allow the Commission to review whether PG&E

00:29:28.700 --> 00:29:31.430
is implementing the plan as intended.

00:29:31.430 --> 00:29:33.083
Is that correct?
<v ->Yes.</v>

00:29:34.580 --> 00:29:38.520
<v ->And asking you in terms of, again, these timing issues</v>

00:29:38.520 --> 00:29:40.560
is what's before the Commission

00:29:40.560 --> 00:29:42.480
and how this would go forward,

00:29:42.480 --> 00:29:44.920
you talk about specific terms, standards,

00:29:44.920 --> 00:29:47.700
expectations, and obligations.

00:29:47.700 --> 00:29:51.770
Can you give us an idea or clarify when would that occur?

00:29:51.770 --> 00:29:53.620
How will those this be developed

00:29:53.620 --> 00:29:56.030
and at what point would they be developed?

00:29:56.030 --> 00:29:57.670
<v ->I think we'll know over time.</v>

00:29:57.670 --> 00:30:00.380
I mean certainly a plan that is designed

00:30:00.380 --> 00:30:03.450
to maintain just and reasonable rates to customers

00:30:03.450 --> 00:30:06.260
while providing the utility, the ability

00:30:07.120 --> 00:30:09.520
to improve its financial standing

00:30:09.520 --> 00:30:14.278
is certainly a primary objective of this proceeding

00:30:14.278 --> 00:30:17.200
and presumably the next rate case

00:30:17.200 --> 00:30:19.580
by ensuring that the utility's able to meet

00:30:19.580 --> 00:30:21.420
its obligations for all the settlement

00:30:21.420 --> 00:30:23.140
of wildfire damage claim costs

00:30:24.891 --> 00:30:28.690
and ensure that the utility is able to modify operations

00:30:28.690 --> 00:30:33.690
to manage the risk of operations, including wildfire risk,

00:30:33.920 --> 00:30:37.790
in a way that protects the public and ensures

00:30:37.790 --> 00:30:40.550
that the utility minimizes its risk

00:30:40.550 --> 00:30:43.720
of repeating these events.

00:30:43.720 --> 00:30:46.110
<v ->So picking up on the beginning of your answer</v>

00:30:46.110 --> 00:30:48.880
to that last question, these again will be things

00:30:48.880 --> 00:30:51.080
that will be developed over time,

00:30:51.080 --> 00:30:55.280
not necessarily things that can, are or can be

00:30:56.240 --> 00:30:57.660
introduced at this point.

00:30:57.660 --> 00:31:00.420
And again, we're taking a snapshot but over time,

00:31:00.420 --> 00:31:01.940
as you just said, we're gonna be developing

00:31:01.940 --> 00:31:03.890
a number of these things that need to be

00:31:03.890 --> 00:31:05.395
come into consideration.

00:31:05.395 --> 00:31:07.404
<v ->And I think the general outlooks</v>

00:31:07.404 --> 00:31:09.870
for what we want to achieve

00:31:09.870 --> 00:31:14.020
can be identified by the actual mechanisms

00:31:14.020 --> 00:31:16.560
that'll allow us to achieve those in a way

00:31:16.560 --> 00:31:19.450
that protects customers and the utility

00:31:19.450 --> 00:31:21.460
is something we'd have to work through.

00:31:21.460 --> 00:31:25.483
<v ->Okay, and again, and the purpose of this would be,</v>

00:31:26.640 --> 00:31:29.470
and would you accept to allow for, if you will,

00:31:29.470 --> 00:31:32.940
course corrections, changes that may surface

00:31:32.940 --> 00:31:37.410
as we go over time to ensure that we don't end up with,

00:31:37.410 --> 00:31:40.490
not only unacceptable levels of rates,

00:31:40.490 --> 00:31:43.180
but certainly safe and reliable service

00:31:43.180 --> 00:31:44.380
coming from the utility.

00:31:45.810 --> 00:31:47.690
<v ->I think that's generally the same question.</v>

00:31:47.690 --> 00:31:50.340
I think that's kind of all part of

00:31:50.340 --> 00:31:52.023
the expectations going forward.

00:32:14.450 --> 00:32:18.220
<v ->Your fifth recommendation, which you have,</v>

00:32:18.220 --> 00:32:20.710
also on page four, you address

00:32:21.700 --> 00:32:24.890
governance issues and the need for autonomy

00:32:27.470 --> 00:32:31.710
and security for the utility, is that correct?

00:32:31.710 --> 00:32:33.070
<v ->Yes.</v>

00:32:33.070 --> 00:32:36.020
<v ->And then on page 28, you go into some</v>

00:32:37.340 --> 00:32:42.340
detail regarding the autonomy and the board of governors

00:32:45.490 --> 00:32:48.233
and point out the need for independence of that board.

00:32:49.200 --> 00:32:52.540
<v ->For the utilities board of the corporate board, yes.</v>

00:32:52.540 --> 00:32:56.010
<v ->And can you tell me, do you, have you made an,</v>

00:32:56.010 --> 00:32:58.840
I don't see specific recommendations

00:32:58.840 --> 00:33:00.780
of how you achieved that independence.

00:33:00.780 --> 00:33:02.700
Is it, are there, for example,

00:33:02.700 --> 00:33:05.063
different people on the two boards or does,

00:33:06.260 --> 00:33:07.610
are you including in your testimony

00:33:07.610 --> 00:33:10.920
specific recommendations that you would want to see?

00:33:10.920 --> 00:33:14.460
<v ->I have not in this testimony, but generally,</v>

00:33:14.460 --> 00:33:17.460
ring-fence separation of the utility from the parent company

00:33:18.400 --> 00:33:22.210
is a structure that has some experience

00:33:22.210 --> 00:33:23.530
throughout the industry.

00:33:23.530 --> 00:33:27.080
Credit rating agencies do provide some insight into

00:33:27.080 --> 00:33:30.883
what can help isolate the utilities credit standing from,

00:33:31.900 --> 00:33:34.843
from erosion of credit standing at the corporate level.

00:33:36.120 --> 00:33:40.360
And I think there is significant industry experience

00:33:40.360 --> 00:33:44.080
that help establish some of those guidelines

00:33:44.080 --> 00:33:46.160
for an appropriate ring-fence separation

00:33:46.160 --> 00:33:47.910
between the utility and the parent company.

00:33:47.910 --> 00:33:50.203
<v ->So, is your testimony today and,</v>

00:33:50.203 --> 00:33:51.990
what I gathered from our earlier discussion,

00:33:51.990 --> 00:33:54.660
this also in that same category of

00:33:54.660 --> 00:33:57.030
things over time that may change your adjustments

00:33:57.030 --> 00:34:00.460
or different criteria maybe introduced in terms of

00:34:00.460 --> 00:34:03.320
what we experience as we implement the plan

00:34:03.320 --> 00:34:05.740
and implement the various recommendations

00:34:05.740 --> 00:34:08.219
that the utility has made in moving us forward

00:34:08.219 --> 00:34:11.040
and to reach a confirmation.

00:34:11.040 --> 00:34:13.500
<v ->I think that is one aspect of the plan</v>

00:34:13.500 --> 00:34:16.800
that can add additional customer protections

00:34:16.800 --> 00:34:18.033
for the utility company.

00:34:19.710 --> 00:34:22.960
And a proper separation of the board of directors

00:34:22.960 --> 00:34:25.240
from the utility for the parent company with

00:34:25.240 --> 00:34:27.227
the ability to make independent determinations

00:34:27.227 --> 00:34:29.720
of the utility capital investment plan

00:34:29.720 --> 00:34:33.460
and requirement to pay dividends to the parent company

00:34:33.460 --> 00:34:34.293
would include

00:34:36.460 --> 00:34:37.600
certain concessions.

00:34:37.600 --> 00:34:40.920
The Commission may ask the utility to agree to

00:34:40.920 --> 00:34:42.120
in approval of the plan.

00:34:44.390 --> 00:34:45.223
<v Mr. Bloom>Thank you, Your Honor,</v>

00:34:45.223 --> 00:34:46.360
I have no further questions.

00:34:48.450 --> 00:34:49.730
<v Judge>Thank you, Mr. Bloom.</v>

00:34:49.730 --> 00:34:52.110
Any other cross for Mr. Gorman?

00:34:52.110 --> 00:34:54.610
Seeing Mr. Abrams one question.

00:34:54.610 --> 00:34:56.130
<v ->One question.</v>

00:34:56.130 --> 00:34:57.313
<v Judge>Go right ahead.</v>

00:34:58.290 --> 00:35:01.660
<v Mr. Abrams>Mr. Gorman, would you say that</v>

00:35:03.480 --> 00:35:06.180
bankruptcy, and the time in bankruptcy

00:35:06.180 --> 00:35:09.980
provides a unique opportunity for

00:35:11.250 --> 00:35:14.253
restructuring financials for the public good?

00:35:18.100 --> 00:35:19.590
<v ->Depending on the circumstances</v>

00:35:19.590 --> 00:35:22.630
which led to the bankruptcy filing, it can,

00:35:22.630 --> 00:35:26.940
into the extent that replacement of a significant

00:35:27.860 --> 00:35:30.090
level of the executives of the utility

00:35:30.090 --> 00:35:32.240
was part of that bankruptcy filing,

00:35:32.240 --> 00:35:34.470
then it's a possibility.

00:35:34.470 --> 00:35:35.550
<v Mr. Abrams>Thank you.</v>

00:35:35.550 --> 00:35:38.660
<v Judge>Thank you, and is there any redirect?</v>

00:35:38.660 --> 00:35:40.940
<v ->Yes, your honor, just very briefly</v>

00:35:40.940 --> 00:35:43.340
as to one question or one area.

00:35:43.340 --> 00:35:48.340
We're asked Mr. Gorman to refer to Mr. Wells' testimony

00:35:48.480 --> 00:35:50.110
at PG&E exhibit

00:35:51.624 --> 00:35:54.960
on pages 228 and 229.

00:35:56.954 --> 00:35:58.720
You call it a testimony?
<v ->Yes, I do.</v>

00:35:58.720 --> 00:36:00.810
<v ->You were characterized as having</v>

00:36:00.810 --> 00:36:03.220
made an error in your testimony.

00:36:03.220 --> 00:36:06.240
Can you explain for the Commission what

00:36:06.240 --> 00:36:11.230
relevance at oversight with respect to these figures

00:36:11.230 --> 00:36:15.050
as with regard to your observations or conclusions

00:36:15.050 --> 00:36:17.197
recommended in your testimony?

00:36:17.197 --> 00:36:20.980
<v ->Well the observation related to whether or not</v>

00:36:20.980 --> 00:36:24.380
there was verifiable interest rates savings

00:36:24.380 --> 00:36:26.270
created by the bankruptcy

00:36:26.270 --> 00:36:28.600
and as observing that there are other

00:36:28.600 --> 00:36:32.120
debt instruments that interest rates may have changed

00:36:32.120 --> 00:36:33.480
as a result of the bankruptcy

00:36:33.480 --> 00:36:36.650
or as a result of the erosion of the credit standing

00:36:36.650 --> 00:36:37.903
of the utility company.

00:36:38.775 --> 00:36:41.530
In, well, the RSA did allow for

00:36:41.530 --> 00:36:44.180
refinancing of some high coupon debt,

00:36:44.180 --> 00:36:45.780
it also allowed for

00:36:46.820 --> 00:36:49.193
the reinstatement of existing utility debt

00:36:49.193 --> 00:36:51.140
that were a provision of the

00:36:52.870 --> 00:36:54.980
reorganization plan, states that those

00:36:54.980 --> 00:36:57.610
bondholders would be made whole for

00:36:57.610 --> 00:36:58.683
damages from,

00:36:59.910 --> 00:37:01.630
from the bankruptcy filing.

00:37:01.630 --> 00:37:03.490
So, wasn't clear to me whether or not

00:37:03.490 --> 00:37:06.350
the interest rates on those bonds would be higher

00:37:06.350 --> 00:37:07.730
because of the bankruptcy than they

00:37:07.730 --> 00:37:10.053
would have been without the bankruptcy.

00:37:10.053 --> 00:37:12.203
So that was the point I was trying to make.

00:37:13.350 --> 00:37:16.490
And while I did miss the interest rate notes

00:37:16.490 --> 00:37:18.230
by Mr. Wells and his testimony,

00:37:18.230 --> 00:37:19.580
it still isn't clear to me

00:37:19.580 --> 00:37:22.500
that those interest rates are not higher

00:37:22.500 --> 00:37:25.240
as a result of the bankruptcy and the restructuring plan

00:37:25.240 --> 00:37:26.600
than they might have been available

00:37:26.600 --> 00:37:28.683
absent the bankruptcy plan.

00:37:30.350 --> 00:37:31.183
<v ->Appreciate it.</v>

00:37:31.183 --> 00:37:32.253
One last question.

00:37:33.180 --> 00:37:37.720
Can you tell me what the answer is to so what.

00:37:37.720 --> 00:37:39.360
So what?

00:37:39.360 --> 00:37:41.210
There's an oversight here.

00:37:41.210 --> 00:37:43.900
What does it mean to your--

00:37:43.900 --> 00:37:46.060
<v ->It means that I have not changed my position,</v>

00:37:46.060 --> 00:37:49.160
that the company has not proven that there are

00:37:49.160 --> 00:37:52.563
net interest rate savings as a result of bankruptcy.

00:37:54.720 --> 00:37:55.990
<v Judge>Any regress?</v>

00:37:55.990 --> 00:37:56.823
No.

00:37:58.230 --> 00:37:59.750
Thank you Mr. Gorman, you are excused.

00:37:59.750 --> 00:38:00.583
<v ->Thank you.</v>

00:38:03.890 --> 00:38:07.530
<v Judge>Believe the next witness is Mr. Long,</v>

00:38:07.530 --> 00:38:08.637
is that correct?

00:38:08.637 --> 00:38:09.560
<v Man>That is correct, Your Honor.</v>

00:38:09.560 --> 00:38:11.410
<v Judge>Go ahead and call Mr. Long.</v>

00:38:13.030 --> 00:38:15.187
<v ->While that's happening, Your Honor, may I move--</v>

00:38:17.520 --> 00:38:19.720
<v Judge>So hold on a second.</v>

00:38:19.720 --> 00:38:21.283
<v ->TURN calls Thomas Long.</v>

00:38:22.390 --> 00:38:23.623
<v Judge>Off the record.</v>

00:38:24.930 --> 00:38:26.280
We'll get him on the stand.

00:38:27.520 --> 00:38:30.620
You can make move then.

00:38:30.620 --> 00:38:32.070
Which one do you moving, it's

00:38:32.070 --> 00:38:35.053
<v ->The only ones that are remaining were two C,</v>

00:38:38.590 --> 00:38:40.450
which I think is, you know, not

00:38:41.760 --> 00:38:45.783
question, and the Gorman,

00:38:47.519 --> 00:38:50.436
(faintly speaking)

00:38:54.700 --> 00:38:55.910
<v Mr. Weisman>I don't actually think you moved</v>

00:38:55.910 --> 00:38:57.426
the other ones in yet, so.

00:38:57.426 --> 00:39:00.343
(faintly speaking)

00:39:01.360 --> 00:39:02.397
Just identify.

00:39:02.397 --> 00:39:04.170
<v Man>'cause I thought we had moved them.</v>

00:39:04.170 --> 00:39:05.620
<v Judge>'cause there was that conversation.</v>

00:39:05.620 --> 00:39:07.160
<v ->We're good with all of 'em,</v>

00:39:07.160 --> 00:39:09.972
so, we won't object to any of 'em.

00:39:09.972 --> 00:39:14.050
<v ->Okay, so I have, so there's the,</v>

00:39:14.050 --> 00:39:16.120
the four, there's forty PSE exhibits.

00:39:16.120 --> 00:39:21.120
EPUC one, one AC, two, two C,

00:39:21.160 --> 00:39:23.463
and then there's the TURN, EPUC, IS.

00:39:24.325 --> 00:39:25.827
<v ->Testament of Gorman.</v>

00:39:25.827 --> 00:39:27.260
<v ->Right, yes.</v>

00:39:27.260 --> 00:39:28.093
That's it.

00:39:32.795 --> 00:39:35.712
(faintly speaking)

00:39:39.262 --> 00:39:41.095
<v ->Okay, let's mark it.</v>

00:39:42.036 --> 00:39:44.680
Well, just for paperwork.

00:39:44.680 --> 00:39:46.220
Let's do this in two parts.

00:39:46.220 --> 00:39:48.020
And then, I'm gonna go on the record

00:39:49.100 --> 00:39:51.300
and we can move into your stuff.

00:39:51.300 --> 00:39:52.650
I'll go back off the record

00:39:53.666 --> 00:39:57.067
and mark those, then I come on the record, identify 'em.

00:40:03.000 --> 00:40:05.540
On the record, Mr. Alcantar.

00:40:05.540 --> 00:40:06.520
<v ->Thank you Your Honor.</v>

00:40:06.520 --> 00:40:07.500
At this time

00:40:08.483 --> 00:40:09.840
(faintly speaking)

00:40:09.840 --> 00:40:12.570
stipulation from counsel from PG&E.

00:40:12.570 --> 00:40:14.600
We would move into the record,

00:40:14.600 --> 00:40:18.940
the exhibits previously marked as EPUC one,

00:40:18.940 --> 00:40:20.043
C one,

00:40:22.180 --> 00:40:23.140
yes, one C.

00:40:23.140 --> 00:40:23.973
<v ->one AC</v>

00:40:23.973 --> 00:40:25.353
<v ->Thank you, one AC.</v>

00:40:26.760 --> 00:40:27.833
C two,

00:40:29.320 --> 00:40:30.900
C two C

00:40:31.810 --> 00:40:36.810
and addition to those EPUC documents,

00:40:36.910 --> 00:40:40.060
we would move the admission of Mr. Gorman's testimony

00:40:40.060 --> 00:40:45.060
previously identified as TURN, EPUC, IS two.

00:40:46.930 --> 00:40:50.850
<v ->Is there any objection to the receipt of those exhibits?</v>

00:40:50.850 --> 00:40:53.680
Seeing none, those exhibits are received.

00:40:53.680 --> 00:40:55.318
Off the record.

00:40:55.318 --> 00:40:57.651
(shuffling)

00:41:42.800 --> 00:41:45.717
(faintly speaking)

00:41:57.974 --> 00:42:00.724
(metal clanking)

00:42:04.846 --> 00:42:07.596
(metal clanking)

00:42:22.817 --> 00:42:24.900
(coughs)

00:42:29.208 --> 00:42:31.458
(creaking)

00:42:51.372 --> 00:42:54.289
(faintly speaking)

00:43:31.266 --> 00:43:32.513
(coughs)

00:43:32.513 --> 00:43:35.407
Any cross exhibits I need to mark for this witness or no?

00:43:37.610 --> 00:43:39.210
<v ->I have one exhibit but I believe TURN</v>

00:43:39.210 --> 00:43:41.900
is planning to offer it during the direct.

00:43:41.900 --> 00:43:42.733
<v ->Okay.</v>

00:43:42.733 --> 00:43:43.566
<v ->Data request responses?</v>

00:43:43.566 --> 00:43:44.610
<v ->Yes.</v>
<v ->Yes.</v>

00:43:44.610 --> 00:43:45.450
<v ->Okay.</v>

00:43:45.450 --> 00:43:47.899
<v ->So the one that we just marked is TURN two, I think.</v>

00:43:47.899 --> 00:43:48.732
<v ->Okay.</v>

00:43:55.460 --> 00:43:56.423
On the record.

00:43:58.689 --> 00:44:00.579
Do you swear to tell the truth, the whole truth

00:44:00.579 --> 00:44:01.560
and nothing but the truth?

00:44:01.560 --> 00:44:02.393
<v ->I do.</v>

00:44:02.393 --> 00:44:03.970
<v ->Thank you, please be seated.</v>

00:44:03.970 --> 00:44:06.763
State your full name, spell your last name for the record.

00:44:08.280 --> 00:44:10.980
Mr. Finkelstein, are you presenting this witness?

00:44:10.980 --> 00:44:13.543
<v ->Yes, my name is Thomas Long, L-O-N-G.</v>

00:44:19.490 --> 00:44:20.560
<v Mr. Finkelstein>Good afternoon, Mr. Long.</v>

00:44:20.560 --> 00:44:21.720
<v ->Good afternoon.</v>

00:44:21.720 --> 00:44:22.600
<v Mr. Finkelstein>Do you have before you</v>

00:44:22.600 --> 00:44:25.010
what's been marked as TURN one,

00:44:25.010 --> 00:44:27.710
which is your prepared reply testimony?

00:44:27.710 --> 00:44:29.100
<v ->Yes, I have that.</v>

00:44:29.100 --> 00:44:30.530
<v ->And do you have, also before you,</v>

00:44:30.530 --> 00:44:32.820
what's been marked as TURN one E,

00:44:32.820 --> 00:44:36.525
which is the errata to your prepared testimony?

00:44:36.525 --> 00:44:37.358
<v Mr. Long>Yes.</v>
<v Judge>I think we haven't</v>

00:44:37.358 --> 00:44:38.191
marked it on the record yet.

00:44:38.191 --> 00:44:41.010
<v ->I'm sorry, Your Honor, could we mark on the record</v>

00:44:41.010 --> 00:44:43.460
TURN one E and TURN two please.

00:44:43.460 --> 00:44:44.690
<v Judge>Sure.</v>

00:44:44.690 --> 00:44:46.820
I have in front of me the errata to

00:44:46.820 --> 00:44:49.763
prepared reply testimony of Thomas Long.

00:44:51.400 --> 00:44:53.663
That will be marked as TURN one E.

00:44:54.920 --> 00:44:57.120
I have TURN exhibit, TURN responses

00:44:57.120 --> 00:44:59.100
to PG&E data requests.

00:44:59.100 --> 00:45:01.153
Two dash seven in 30,

00:45:01.153 --> 00:45:03.003
that'll be marked as TURN two.

00:45:04.420 --> 00:45:05.253
Go ahead.

00:45:06.820 --> 00:45:08.140
<v ->So Mr. Long, do you still have before you,</v>

00:45:08.140 --> 00:45:11.720
what's been marked as TURN one dash E, your errata.

00:45:11.720 --> 00:45:12.736
<v ->Yes, I have that.</v>

00:45:12.736 --> 00:45:15.450
<v ->And that's errata to your prepared reply testimony?</v>

00:45:15.450 --> 00:45:16.560
<v ->That's correct.</v>

00:45:16.560 --> 00:45:18.180
<v ->And do you have before you what's been marked as</v>

00:45:18.180 --> 00:45:22.810
TURN two, which are responses to PG&E data requests?

00:45:22.810 --> 00:45:23.643
<v ->I have that.</v>

00:45:25.687 --> 00:45:27.470
<v ->Are these materials prepared by you</v>

00:45:27.470 --> 00:45:28.740
or under your direction?

00:45:28.740 --> 00:45:29.680
<v ->Yes, they were.</v>

00:45:29.680 --> 00:45:32.150
<v ->To the extent they make factual assertions,</v>

00:45:32.150 --> 00:45:34.200
are they true and correct to the best of your knowledge?

00:45:34.200 --> 00:45:35.033
<v ->Yes.</v>

00:45:35.033 --> 00:45:38.130
<v ->And to the extent they recommend policies,</v>

00:45:38.130 --> 00:45:40.890
do they reflect your best judgment on these matters?

00:45:40.890 --> 00:45:42.540
<v ->Yes, they do.</v>

00:45:42.540 --> 00:45:44.490
<v ->Do you have any corrections to make to your testimony?</v>

00:45:44.490 --> 00:45:46.080
<v ->I do not.</v>

00:45:46.080 --> 00:45:48.390
<v ->Your Honor, Mr. Long's available for cross.</v>

00:45:48.390 --> 00:45:49.390
<v Judge>Thank you.</v>

00:45:50.380 --> 00:45:52.350
Mr. Rutner, are you doing cross on this witness?

00:45:52.350 --> 00:45:53.230
<v Mr. Rutner>I am, Your Honor.</v>

00:45:53.230 --> 00:45:54.780
<v Judge>Go ahead.</v>

00:45:54.780 --> 00:45:56.290
<v ->Good afternoon, Mr. Long.</v>

00:45:56.290 --> 00:45:57.123
<v Mr. Long>Good afternoon.</v>

00:45:57.123 --> 00:45:59.340
<v ->I'd like to use our time together to focus on</v>

00:45:59.340 --> 00:46:01.853
the issues surrounding executive compensation.

00:46:03.090 --> 00:46:06.190
In your testimony, you offer a number of opinions

00:46:06.190 --> 00:46:08.750
about the proper design of PG&E's

00:46:08.750 --> 00:46:11.470
executive compensation programs, correct?

00:46:11.470 --> 00:46:12.380
<v ->Yes.</v>

00:46:12.380 --> 00:46:14.670
<v ->Have you ever worked for a company</v>

00:46:14.670 --> 00:46:18.000
where you have responsibility for designing that company's

00:46:18.000 --> 00:46:19.680
executive compensation program?

00:46:19.680 --> 00:46:21.020
<v ->I have not.</v>

00:46:21.020 --> 00:46:23.350
<v ->Have you published any peer-reviewed articles</v>

00:46:23.350 --> 00:46:26.860
on the subject of proper executive compensation design?

00:46:26.860 --> 00:46:27.760
<v ->I have not.</v>

00:46:27.760 --> 00:46:30.730
<v ->Do you hold a degree in industrial relations?</v>

00:46:30.730 --> 00:46:31.563
<v ->I do not.</v>

00:46:31.563 --> 00:46:34.010
<v ->Do you hold a degree in human resources management?</v>

00:46:34.010 --> 00:46:34.843
<v ->I do not.</v>

00:46:38.630 --> 00:46:40.480
<v ->You would agree with me that</v>

00:46:40.480 --> 00:46:43.950
it is important for PG&E to mitigate the risk

00:46:43.950 --> 00:46:45.523
of catastrophic wildfires.

00:46:46.810 --> 00:46:48.047
<v ->Yes, I certainly would.</v>

00:46:48.047 --> 00:46:50.380
<v ->And you understand that</v>

00:46:50.380 --> 00:46:53.210
public safety power shutoffs or PSPS

00:46:53.210 --> 00:46:55.343
is one way of mitigating that risk.

00:46:56.470 --> 00:46:58.920
<v ->Yes, but they're also offsetting</v>

00:46:58.920 --> 00:47:01.840
risks that the shutoffs themselves pose.

00:47:01.840 --> 00:47:04.200
<v ->So a PSPS can itself create additional,</v>

00:47:04.200 --> 00:47:05.530
create separate risks.

00:47:05.530 --> 00:47:06.610
<v ->Exactly.</v>
<v ->Okay.</v>

00:47:06.610 --> 00:47:09.680
So there can be risks associated with

00:47:09.680 --> 00:47:11.060
not implementing a PSPS

00:47:12.440 --> 00:47:16.100
and there can risks associated with implementing a PSPS,

00:47:16.100 --> 00:47:17.250
fair?

00:47:17.250 --> 00:47:18.083
<v ->Yes.</v>

00:47:19.160 --> 00:47:20.470
<v ->So would you agree the decision</v>

00:47:20.470 --> 00:47:24.043
of whether to implement a PSPS is a serious decision.

00:47:25.570 --> 00:47:27.320
<v ->It's a serious decision, I agree.</v>

00:47:28.220 --> 00:47:29.870
<v ->Would you agree that that decision</v>

00:47:29.870 --> 00:47:32.520
should be made to the extent possible

00:47:32.520 --> 00:47:35.370
based on objective criteria, such as,

00:47:35.370 --> 00:47:36.983
for example, weather conditions.

00:47:39.230 --> 00:47:41.370
<v ->It should be made on, based on a lot of,</v>

00:47:41.370 --> 00:47:42.860
many considerations

00:47:44.080 --> 00:47:46.240
and there are others that, in my organization,

00:47:46.240 --> 00:47:47.610
who have been focused on that in the

00:47:47.610 --> 00:47:49.490
de-energization docket,

00:47:49.490 --> 00:47:52.290
but I would generally agree with your statement.

00:47:52.290 --> 00:47:54.880
<v ->Certainly, you would agree injecting someone's</v>

00:47:54.880 --> 00:47:57.620
personal financial motivations,

00:47:57.620 --> 00:48:01.120
each of the decision of whether to implement a PSPS,

00:48:01.120 --> 00:48:02.253
would be a bad idea.

00:48:04.480 --> 00:48:06.200
<v ->I think the decision to,</v>

00:48:06.200 --> 00:48:09.380
whether or not to implement a PSPS in the scope, et cetera,

00:48:09.380 --> 00:48:12.103
should not be based on financial considerations.

00:48:13.370 --> 00:48:14.683
<v ->In your testimony,</v>

00:48:16.830 --> 00:48:19.070
and I'll be looking at page 32 if that's helpful.

00:48:19.070 --> 00:48:20.680
It should be in tab one of the binder

00:48:20.680 --> 00:48:23.233
that we set up there for you as a resource.

00:48:24.650 --> 00:48:28.130
In your testimony, you proposed a

00:48:28.130 --> 00:48:31.290
incentive compensation performance metric

00:48:31.290 --> 00:48:35.690
called Customer Hours of PSPS Shutoffs

00:48:35.690 --> 00:48:38.650
Per High Fire Threat District Mile.

00:48:38.650 --> 00:48:40.150
Is that correct?

00:48:40.150 --> 00:48:42.810
<v ->Yes, and we also spoke to that</v>

00:48:42.810 --> 00:48:44.980
in one of our data request responses.

00:48:44.980 --> 00:48:46.110
<v ->Let's look at those data response</v>

00:48:46.110 --> 00:48:49.653
which I believe were just marked as TURN two.

00:48:51.750 --> 00:48:55.110
And I'd like to focus you on pages three and four,

00:48:55.110 --> 00:48:57.200
where we can find that discussion

00:48:57.200 --> 00:49:01.173
and it's helpful that's in your binder up there at tab two.

00:49:02.390 --> 00:49:03.548
<v ->I have it.</v>

00:49:03.548 --> 00:49:04.381
<v ->Okay.</v>

00:49:16.240 --> 00:49:18.280
And on page

00:49:19.490 --> 00:49:20.930
three.

00:49:20.930 --> 00:49:25.600
This metric called Customer Hours of PSPS Shutoffs

00:49:25.600 --> 00:49:27.750
Per High Fire Threat District Mile,

00:49:27.750 --> 00:49:31.520
that is defined as the number of customer hours

00:49:31.520 --> 00:49:35.283
of de-energization due to PSPS, correct?

00:49:36.580 --> 00:49:37.750
<v ->That's the general definition,</v>

00:49:37.750 --> 00:49:40.010
although those actual, specific calculation

00:49:40.010 --> 00:49:42.880
is shown in the row below that.

00:49:42.880 --> 00:49:44.830
<v ->Of the general, the general definition</v>

00:49:44.830 --> 00:49:46.590
is I just phrased it is

00:49:46.590 --> 00:49:48.870
tracks what's here in the TURN's data response.

00:49:48.870 --> 00:49:50.070
<v ->Yes.</v>

00:49:50.070 --> 00:49:52.350
<v ->And looking above that, at the paragraph</v>

00:49:52.350 --> 00:49:54.463
that begins with the word response,

00:49:55.360 --> 00:50:00.360
it says, quote, "As stated on page 32, lines three to four

00:50:01.040 --> 00:50:05.200
of Mr. Long's reply testimony, the purpose of this metric

00:50:05.200 --> 00:50:08.040
is to incentivize a reduction in the

00:50:08.040 --> 00:50:13.040
frequency, scope and duration of PSPS event,

00:50:13.470 --> 00:50:16.600
which is the same goal that PG&E identified

00:50:16.600 --> 00:50:20.580
for its proposed substation enablement metric."

00:50:21.930 --> 00:50:26.360
Did I accurately read TURN's text there?

00:50:26.360 --> 00:50:27.400
<v ->Yes, that's accurate.</v>

00:50:27.400 --> 00:50:29.520
<v ->Okay, and as a citation for that,</v>

00:50:29.520 --> 00:50:31.560
it goes on to cite Mr. Lowe's testimony

00:50:31.560 --> 00:50:34.110
on page seven dash 17, do you see that?

00:50:34.110 --> 00:50:35.020
<v ->Yes.</v>

00:50:35.020 --> 00:50:37.160
<v ->Mr. Lowe's testimony is up there with you</v>

00:50:37.160 --> 00:50:39.530
in tab three of the binder we provided.

00:50:39.530 --> 00:50:42.323
Let me ask you to look at page seven 17 please.

00:50:43.691 --> 00:50:46.608
(faintly speaking)

00:50:49.750 --> 00:50:51.480
<v Judge>I'm sure Mr. Long will</v>

00:50:51.480 --> 00:50:53.298
let us know when he's ready.

00:50:53.298 --> 00:50:58.298
(laughs)
(faintly speaking)

00:51:01.369 --> 00:51:03.560
<v ->Okay, I'm at page seven dash 17.</v>

00:51:03.560 --> 00:51:05.540
<v ->Okay, and--</v>
<v Judge>Mr. Finkelstein.</v>

00:51:05.540 --> 00:51:07.220
Okay, keep going.
<v ->Can you please show us</v>

00:51:07.220 --> 00:51:09.580
where, on page seven 17,

00:51:09.580 --> 00:51:11.920
or anywhere on Mr. Lowe's testimony,

00:51:11.920 --> 00:51:14.640
where he says the purpose of PG&E's

00:51:14.640 --> 00:51:19.090
substation enablement metric is to incentivize

00:51:19.090 --> 00:51:22.003
a reduction in the frequency of PSPS.

00:51:30.979 --> 00:51:32.960
<v ->In that paragraph on that page,</v>

00:51:32.960 --> 00:51:34.420
I do not see the word frequency.

00:51:34.420 --> 00:51:36.930
However, I did see that in numerous places

00:51:36.930 --> 00:51:38.980
in PG&E's testimony elsewhere,

00:51:38.980 --> 00:51:43.000
that PG&E is striving and takes very seriously

00:51:43.000 --> 00:51:45.900
its desire to reduce not just the scope,

00:51:45.900 --> 00:51:48.343
but the frequency of PSPS events.

00:51:49.390 --> 00:51:51.640
<v ->Do you see anything in Mr. Lowe's testimony</v>

00:51:51.640 --> 00:51:54.443
or can you point us to anything on any PG&E testimony

00:51:54.443 --> 00:51:56.410
that says the purpose of these

00:51:56.410 --> 00:51:58.640
substation enablement metric

00:51:58.640 --> 00:52:01.820
is reduce the frequency of PSPS.

00:52:01.820 --> 00:52:03.250
<v ->I don't see it in this paragraph,</v>

00:52:03.250 --> 00:52:05.870
and, you know, I don't have the time now to

00:52:05.870 --> 00:52:08.890
scope through every word of his testimony, but,

00:52:08.890 --> 00:52:10.670
I don't see it in this particular paragraph

00:52:10.670 --> 00:52:11.970
that you've pointed me to.

00:52:17.350 --> 00:52:20.460
<v ->Can you point us to anything in Mr. Lowe's testimony</v>

00:52:20.460 --> 00:52:22.910
or elsewhere in PG&E's testimony

00:52:22.910 --> 00:52:25.060
saying that PG&E is trying to inject

00:52:25.060 --> 00:52:28.140
personal financial motivation into the decision

00:52:28.140 --> 00:52:30.143
of whether to implement a PSPS event.

00:52:33.030 --> 00:52:34.260
<v ->Could you repeat that question?</v>

00:52:34.260 --> 00:52:35.093
<v ->Sure.</v>

00:52:35.093 --> 00:52:37.530
Can you point us to anything in Mr. Lowe's testimony

00:52:37.530 --> 00:52:40.040
or elsewhere in PG&E's testimony

00:52:40.040 --> 00:52:42.330
saying that PG&E is trying to inject

00:52:42.330 --> 00:52:45.500
personal financial motivations into the decision

00:52:45.500 --> 00:52:48.573
of whether to implement a PSPS event.

00:52:52.170 --> 00:52:55.750
<v ->I don't think that was the nature of my concerns</v>

00:52:55.750 --> 00:52:59.150
about the way that PG&E structured its

00:52:59.150 --> 00:53:01.740
incentive compensation program, so,

00:53:01.740 --> 00:53:03.760
I don't think you'll find that in my testimony.

00:53:03.760 --> 00:53:04.940
<v ->So you can't point us to anything</v>

00:53:04.940 --> 00:53:06.690
in PG&E's testimony to that effect?

00:53:09.350 --> 00:53:10.760
<v ->If you're talking just about the</v>

00:53:10.760 --> 00:53:12.380
substation enablement metric,

00:53:12.380 --> 00:53:14.250
is that what your question pertains to?

00:53:14.250 --> 00:53:15.640
<v ->My question was actually a little broader.</v>

00:53:15.640 --> 00:53:16.960
I'll ask it again.

00:53:16.960 --> 00:53:17.793
The question was,

00:53:17.793 --> 00:53:20.890
can you point us to anything in PG&E's testimony

00:53:20.890 --> 00:53:23.500
saying that PG&E is trying to inject

00:53:23.500 --> 00:53:26.380
personal financial motivations into the decision

00:53:26.380 --> 00:53:28.503
of whether to call a PSPS event.

00:53:32.300 --> 00:53:34.720
<v ->No, I know, and I'm sure PG&E would not say that</v>

00:53:34.720 --> 00:53:36.160
that's what they're trying to do,

00:53:36.160 --> 00:53:37.910
so I don't think I would find that.

00:53:40.288 --> 00:53:42.820
<v ->Let's talk about the situation in which</v>

00:53:42.820 --> 00:53:47.067
incentive compensation that is otherwise payable at PG&E

00:53:47.067 --> 00:53:48.650
may be denied.

00:53:48.650 --> 00:53:52.670
You understand that, as described in Mr. Lowe's testimony,

00:53:52.670 --> 00:53:55.670
the board of compensation committee has discretion

00:53:55.670 --> 00:53:59.137
to reduce or eliminate incentive compensation of awards if,

00:53:59.137 --> 00:54:00.870
you know, totality of circumstances,

00:54:00.870 --> 00:54:02.440
they believe that would be appropriate.

00:54:02.440 --> 00:54:03.850
You understand that to be the case.

00:54:03.850 --> 00:54:05.270
<v ->I understand that and I believe the phrase</v>

00:54:05.270 --> 00:54:08.373
that was used was, as the board sees fit.

00:54:10.810 --> 00:54:12.880
<v ->Are you aware that the board has in fact</v>

00:54:12.880 --> 00:54:15.693
reduced incentive compensation in prior years?

00:54:16.830 --> 00:54:19.120
<v ->I saw a reference to that in PG&E's testimony.</v>

00:54:19.120 --> 00:54:20.800
I don't know for a fact myself,

00:54:20.800 --> 00:54:22.280
but I saw a reference to that.

00:54:22.280 --> 00:54:25.380
<v ->Are you aware that the board reduced,</v>

00:54:25.380 --> 00:54:29.280
awards to zero in, for the year 2018?

00:54:29.280 --> 00:54:30.113
<v ->I've heard that.</v>

00:54:30.113 --> 00:54:32.830
I don't know that personally, but I've heard that.

00:54:32.830 --> 00:54:34.090
<v ->Are you aware that the board</v>

00:54:34.090 --> 00:54:35.690
reduced incentive compensation

00:54:35.690 --> 00:54:38.050
following the San Bruno tragedy?

00:54:38.050 --> 00:54:39.750
<v ->I do not know one way the other.</v>

00:54:41.640 --> 00:54:42.473
<v ->Let me ask you to look at</v>

00:54:42.473 --> 00:54:45.023
page 36 of your testimony please.

00:54:57.600 --> 00:54:59.973
I'd like to focus you on line 26.

00:55:04.360 --> 00:55:05.193
Let me know when you're there.

00:55:05.193 --> 00:55:06.026
<v ->I'm there.</v>

00:55:07.317 --> 00:55:08.240
<v ->In the middle of a sentence,</v>

00:55:08.240 --> 00:55:12.380
it says, "TURN recommends that most or all

00:55:12.380 --> 00:55:16.390
of PG&E's otherwise payable incentive compensation

00:55:16.390 --> 00:55:20.400
be eliminated in the event of a catastrophic wildfire,

00:55:20.400 --> 00:55:24.010
defined as a fire involving one or more fatalities"

00:55:24.010 --> 00:55:25.770
and then it goes on from there, do you see that?

00:55:25.770 --> 00:55:28.929
<v ->Right, and includes, or a catastrophic gas event as well.</v>

00:55:28.929 --> 00:55:31.490
<v ->Right, I'm gonna focus on the fire aspect of that.</v>

00:55:31.490 --> 00:55:33.896
And that's TURN's recommendation in this proceeding?

00:55:33.896 --> 00:55:36.640
<v ->It is a recommendation and it is</v>

00:55:36.640 --> 00:55:40.223
further elaborated upon in my data request responses.

00:55:42.180 --> 00:55:44.380
<v ->Under TURN's proposal, in this recommendation,</v>

00:55:44.380 --> 00:55:48.720
would the elimination of most or all incentive compensation

00:55:49.600 --> 00:55:52.140
in the event of a catastrophic wildfire

00:55:52.140 --> 00:55:55.033
be automatic or will it be subject to discretion?

00:55:58.270 --> 00:56:00.560
<v ->If I could take a moment and</v>

00:56:00.560 --> 00:56:02.150
find the data request response

00:56:02.150 --> 00:56:04.480
where we elaborated on this proposal.

00:56:04.480 --> 00:56:05.313
I think I can

00:56:06.430 --> 00:56:07.580
speak to that question.

00:56:30.131 --> 00:56:31.930
Okay, I've located our data request response.

00:56:31.930 --> 00:56:33.350
Would you mind repeating the question?

00:56:33.350 --> 00:56:35.470
<v ->Sure, under TURN's proposal that I've read</v>

00:56:35.470 --> 00:56:39.540
from your testimony for elimination of most or all

00:56:39.540 --> 00:56:42.870
incentive compensation in the case of catastrophic wildfire,

00:56:42.870 --> 00:56:45.530
defined as involving one or more fatalities,

00:56:45.530 --> 00:56:47.950
would the elimination of that compensation

00:56:47.950 --> 00:56:50.413
be automatic or subject to discretion?

00:56:54.250 --> 00:56:56.980
<v ->If you'll allow me to just preface my response,</v>

00:56:56.980 --> 00:56:58.530
I do intend to answer that question,

00:56:58.530 --> 00:57:00.793
but I wanna preface it by saying that

00:57:00.793 --> 00:57:05.520
TURN's recommendation on executive compensation is

00:57:05.520 --> 00:57:08.660
first and foremost that PG&E should

00:57:08.660 --> 00:57:11.510
put in a revised proposal that takes into account

00:57:11.510 --> 00:57:13.520
the concerns that TURN has raised

00:57:13.520 --> 00:57:15.380
and we're hoping the Commission will,

00:57:15.380 --> 00:57:17.150
in its order in this proceeding,

00:57:17.150 --> 00:57:20.680
direct PG&E to address some of those concerns

00:57:20.680 --> 00:57:22.570
or all of our concerns, actually.

00:57:22.570 --> 00:57:26.450
And one of those concerns is the standard list discretion

00:57:26.450 --> 00:57:31.210
that PG&E is giving itself for reduction or elimination

00:57:31.210 --> 00:57:32.863
of executive compensation.

00:57:34.090 --> 00:57:36.584
So our proposal has elaborated upon,

00:57:36.584 --> 00:57:41.310
as a suggestion to PG&E in this revised proposal.

00:57:41.310 --> 00:57:43.750
It's not a definitive proposal by TURN,

00:57:43.750 --> 00:57:48.270
but a suggestion to PG&E is that PG&E withhold

00:57:48.270 --> 00:57:52.580
50% of the executive compensation in the even that

00:57:52.580 --> 00:57:54.910
PG&E causes one of the events that

00:57:54.910 --> 00:57:56.270
I've mentioned in my testimony,

00:57:56.270 --> 00:58:00.570
a catastrophic wildfire or a catastrophic explosion

00:58:00.570 --> 00:58:02.480
on the gas, on its gas lines

00:58:03.580 --> 00:58:08.260
and that PG&E have discretion based on identified criteria

00:58:08.260 --> 00:58:10.610
to withhold more than that.

00:58:10.610 --> 00:58:13.560
So that's, that I hope is responsive to your question.

00:58:13.560 --> 00:58:15.360
<v ->It is, thank you, let me try to rephrase</v>

00:58:15.360 --> 00:58:16.810
to make sure I understand.

00:58:16.810 --> 00:58:19.220
So first of all, I understand that TURN's recommendation,

00:58:19.220 --> 00:58:21.020
are you saying it has evolved,

00:58:21.020 --> 00:58:24.710
from the time of your testimony on February 21st,

00:58:24.710 --> 00:58:27.790
to the time of the data responses of February 28th.

00:58:27.790 --> 00:58:29.570
<v ->In response to PG&E's question,</v>

00:58:29.570 --> 00:58:32.240
We've endeavored to try to give PG&E more guidance

00:58:32.240 --> 00:58:33.960
about what we're looking for.

00:58:33.960 --> 00:58:36.180
So the recommendation is the same,

00:58:36.180 --> 00:58:38.230
but we've given PG&E more details about

00:58:38.230 --> 00:58:41.670
what we're looking for in a program that would have,

00:58:41.670 --> 00:58:43.240
do a better job of bounding

00:58:43.240 --> 00:58:46.670
the discretion of the PG&E board.

00:58:46.670 --> 00:58:48.704
<v ->And so as I understand, a proposal at--</v>

00:58:48.704 --> 00:58:50.490
(coughs) Excuse me.

00:58:50.490 --> 00:58:53.140
I understand correctly the proposal as it currently stands

00:58:53.140 --> 00:58:54.573
based on your testimony,

00:58:55.860 --> 00:58:58.970
at 50% of incentive compensation

00:58:58.970 --> 00:59:00.540
would be automatically denied

00:59:00.540 --> 00:59:02.490
in the event of a catastrophic wildfire.

00:59:02.490 --> 00:59:03.323
Is that fair?

00:59:03.323 --> 00:59:07.870
<v ->Well, automatic is,</v>

00:59:07.870 --> 00:59:10.000
is a determination.

00:59:10.000 --> 00:59:11.920
PG&E would make a determination

00:59:11.920 --> 00:59:16.920
whether it had caused a catastrophic wildfire

00:59:16.970 --> 00:59:19.880
that leads to one or more deaths

00:59:19.880 --> 00:59:23.580
or a gas explosion that leads to one or more deaths.

00:59:23.580 --> 00:59:25.730
PG&E would make a determination

00:59:25.730 --> 00:59:29.133
and that determination would be made and PG&E would then,

00:59:30.880 --> 00:59:32.490
I don't think I'd use the word automatic,

00:59:32.490 --> 00:59:35.440
but PG&E would then, at a minimum,

00:59:35.440 --> 00:59:40.070
reduce the otherwise payable incentive award by 50%.

00:59:40.070 --> 00:59:42.760
If circumstances changed and PG&E learned more

00:59:42.760 --> 00:59:44.760
for example, found that it did not, in fact,

00:59:44.760 --> 00:59:48.790
cause on of those events, then PG&E would have the chance

00:59:48.790 --> 00:59:52.490
to revise that determination.

00:59:52.490 --> 00:59:54.140
<v ->Let me,</v>

00:59:54.140 --> 00:59:56.380
let me ask this by way of examples

00:59:56.380 --> 00:59:58.400
to see if I can understand.

00:59:58.400 --> 01:00:03.400
Let's say the PG&E equipment ignites a wildfire

01:00:03.610 --> 01:00:04.910
that results in a fatality

01:00:05.940 --> 01:00:08.667
because a car slammed into a pole and knocked it over,

01:00:08.667 --> 01:00:10.923
and so the PG&E equipment started sparking.

01:00:12.070 --> 01:00:14.680
Under TURN's recommendation, in that situation,

01:00:14.680 --> 01:00:16.510
would the executives lose

01:00:16.510 --> 01:00:19.120
at least 50% of their incentive compensation?

01:00:19.120 --> 01:00:21.260
<v ->I think of whether or not PG&E was the cause</v>

01:00:21.260 --> 01:00:23.210
would depend on the circumstances.

01:00:23.210 --> 01:00:26.540
So if it was a well-placed pole that was well maintained,

01:00:26.540 --> 01:00:29.520
and PG&E's operation of the pole,

01:00:29.520 --> 01:00:31.300
or PG&E maintenance of the pole,

01:00:31.300 --> 01:00:32.840
placement of the pole, et cetera,

01:00:32.840 --> 01:00:37.300
had absolutely nothing to do with the cause of the wildfire,

01:00:37.300 --> 01:00:39.700
then I would not attribute the cause there to PG&E.

01:00:39.700 --> 01:00:41.670
I would say the cause there was

01:00:41.670 --> 01:00:44.420
the vehicle running into the pole.

01:00:44.420 --> 01:00:46.640
So I would not call that a PG&E-caused event.

01:00:46.640 --> 01:00:48.584
<v ->Okay, so even though these sparks came</v>

01:00:48.584 --> 01:00:51.400
(coughs) from PG&E's equipment,

01:00:51.400 --> 01:00:53.310
that is not a situation where executives

01:00:53.310 --> 01:00:55.852
would lose their incentive compensation?

01:00:55.852 --> 01:00:59.930
<v ->I wouldn't suggest that that happened in that case, but,</v>

01:00:59.930 --> 01:01:01.080
but you may be getting,

01:01:01.950 --> 01:01:04.210
you may be getting to what happens if a,

01:01:04.210 --> 01:01:06.570
if a limb blows into a line and causes a spark.

01:01:06.570 --> 01:01:08.653
In that instance, I would say PG&E,

01:01:09.600 --> 01:01:13.496
PG&E's facilities did cause the wildfire

01:01:13.496 --> 01:01:15.740
and that should be considered a PG&E-caused event.

01:01:15.740 --> 01:01:18.050
<v ->And in that situation, the executives would lose</v>

01:01:18.050 --> 01:01:20.340
at least 50% of their incentive compensation

01:01:20.340 --> 01:01:21.750
under TURN's proposal.

01:01:21.750 --> 01:01:22.583
<v ->Yes.</v>

01:01:22.583 --> 01:01:27.370
<v ->What if the limb blows from 50 feet away.</v>

01:01:27.370 --> 01:01:28.453
<v ->Same.</v>
<v ->Same.</v>

01:01:29.550 --> 01:01:33.030
<v ->What if PG&E could have called a PSPS</v>

01:01:34.450 --> 01:01:37.350
but did not and the limb blows into the live line

01:01:37.350 --> 01:01:39.450
and the fire starts, same,

01:01:39.450 --> 01:01:42.320
executives lose half their incentive compensation?

01:01:42.320 --> 01:01:44.680
<v ->They would lose at least half and then,</v>

01:01:44.680 --> 01:01:46.250
there would be criteria that we're

01:01:46.250 --> 01:01:48.350
encouraging PG&E to develop

01:01:48.350 --> 01:01:49.780
to determine whether there should be

01:01:49.780 --> 01:01:53.800
additional withholding of incentive-based compensation.

01:01:53.800 --> 01:01:55.620
<v ->Let me give you a different example.</v>

01:01:55.620 --> 01:01:58.500
Let's say a piece of PG&E fails

01:01:59.520 --> 01:02:01.250
for reasons that have nothing to do with

01:02:01.250 --> 01:02:03.670
negligence or violation of law on PG&E's part.

01:02:03.670 --> 01:02:06.307
Let's just say it's a brand new piece of equipment

01:02:06.307 --> 01:02:08.500
and a latent manufacturing defect

01:02:08.500 --> 01:02:10.450
no one could've known about.

01:02:10.450 --> 01:02:12.890
Fire starts, there's a fatality.

01:02:12.890 --> 01:02:15.760
Under TURN's proposal, PG&E executives lose

01:02:15.760 --> 01:02:17.840
at least half their incentive compensation.

01:02:17.840 --> 01:02:20.380
<v ->PG&E's responsible for that equipment.</v>

01:02:20.380 --> 01:02:21.580
I've never heard of anything like

01:02:21.580 --> 01:02:23.620
what you're talking about happening

01:02:23.620 --> 01:02:25.570
in any of the catastrophic events

01:02:25.570 --> 01:02:29.103
that we've seen in California in PG&E's service territory,

01:02:30.410 --> 01:02:31.980
but I would say PG&E's responsible

01:02:31.980 --> 01:02:34.793
for making sure that its equipment is up to the job.

01:02:39.010 --> 01:02:40.570
<v ->Are you aware of any</v>

01:02:42.530 --> 01:02:46.500
articles or studies or literature that discusses

01:02:46.500 --> 01:02:50.140
the effects on a company's ability to recruit

01:02:51.200 --> 01:02:54.500
if employees can lose their incentive compensation

01:02:54.500 --> 01:02:56.833
for reasons that are out of their control?

01:02:58.718 --> 01:03:00.680
<v ->I'm not aware of,</v>

01:03:00.680 --> 01:03:03.453
and it speaks specifically to that,

01:03:05.051 --> 01:03:08.660
but my concern is that PG&E has a program

01:03:08.660 --> 01:03:10.860
where it just says we can do it

01:03:10.860 --> 01:03:13.810
based on anything that we see fit.

01:03:13.810 --> 01:03:16.980
We can withhold based on anything we think

01:03:16.980 --> 01:03:18.890
is a good reason to withhold

01:03:18.890 --> 01:03:21.730
and if I were an employee subject to that regime,

01:03:21.730 --> 01:03:23.110
I would be a little bit concerned about

01:03:23.110 --> 01:03:26.600
not knowing the basis for PG&E's making that decision

01:03:26.600 --> 01:03:28.470
and I would think that would have a problem,

01:03:28.470 --> 01:03:31.330
that would cause a problem for

01:03:31.330 --> 01:03:33.550
recruiting and retaining talent.

01:03:33.550 --> 01:03:36.760
<v ->So you're concerned that PG&E's</v>

01:03:36.760 --> 01:03:38.293
incentive compensation programs as described

01:03:38.293 --> 01:03:40.170
and the testimony of Mr. Lowe

01:03:41.040 --> 01:03:42.880
give too much discretion to the board

01:03:42.880 --> 01:03:45.090
that might hurt PG&E's ability to recruit?

01:03:45.090 --> 01:03:46.870
<v ->It's not that there's,</v>

01:03:46.870 --> 01:03:50.350
the problem is, and I state this in my testimony

01:03:50.350 --> 01:03:54.010
that the discretion is bound, is not bounded

01:03:54.010 --> 01:03:55.970
and there are no criteria given

01:03:55.970 --> 01:04:00.080
and the statute says that the metrics that are to be used

01:04:00.080 --> 01:04:02.320
to determine incentive compensation

01:04:02.320 --> 01:04:04.770
are to be measurable and enforceable.

01:04:04.770 --> 01:04:08.670
There's nothing in a as we see fit standard

01:04:08.670 --> 01:04:11.900
that this Commission or the Wildfire Safety Division

01:04:11.900 --> 01:04:15.300
if it has the responsibility can enforce against.

01:04:15.300 --> 01:04:18.300
PG&E could decide, after an event like the campfire,

01:04:18.300 --> 01:04:22.630
that it doesn't see a reason to

01:04:22.630 --> 01:04:24.540
withhold any executive compensation.

01:04:24.540 --> 01:04:27.080
There's nothing in a as we see fit standard

01:04:27.080 --> 01:04:29.860
that prevents, that the Commission could enforce

01:04:29.860 --> 01:04:31.129
in that instance.

01:04:31.129 --> 01:04:33.650
<v ->Are you expressing a concern, Mr. Long,</v>

01:04:33.650 --> 01:04:35.303
for PG&E's executives?

01:04:37.047 --> 01:04:38.290
<v ->I'm express--</v>

01:04:38.290 --> 01:04:41.120
I think executive compensation is extremely important.

01:04:41.120 --> 01:04:42.730
We've devoted a lot of attention to it,

01:04:42.730 --> 01:04:45.950
not just for PG&E but to the other utilities

01:04:45.950 --> 01:04:49.380
because we think it can be a way of focusing

01:04:49.380 --> 01:04:51.720
behavior on what matters with respect to safety.

01:04:51.720 --> 01:04:54.190
So that's the concern, is that we have

01:04:54.190 --> 01:04:57.900
executives that are focused on safety

01:04:57.900 --> 01:05:00.410
and making the company as safe as possible.

01:05:00.410 --> 01:05:04.550
<v ->Let me, let me ask you about the issue of discretion.</v>

01:05:04.550 --> 01:05:06.230
I understand your position that you think

01:05:06.230 --> 01:05:08.230
there should be some bounds around that.

01:05:09.080 --> 01:05:12.040
And, as I understand that, you are saying that

01:05:12.040 --> 01:05:17.010
in an event of a PG&E-caused wildfire involving fatality,

01:05:17.010 --> 01:05:18.917
executives would lose at a least half their compensation

01:05:18.917 --> 01:05:22.110
and the other half would potentially be lost

01:05:22.110 --> 01:05:23.343
subject to discretion, is that your--

01:05:23.343 --> 01:05:27.480
<v ->Subject to discretion, but based on stated criteria.</v>

01:05:27.480 --> 01:05:29.000
Akin to what the Commission does,

01:05:29.000 --> 01:05:31.620
the Commission has criteria that it sets forth

01:05:31.620 --> 01:05:33.710
for determining a penalty amount,

01:05:33.710 --> 01:05:36.710
but there's discretion, but there's criteria that

01:05:36.710 --> 01:05:39.240
show how the discretion will be exercised

01:05:39.240 --> 01:05:41.810
instead of as we see fit.

01:05:41.810 --> 01:05:44.470
<v ->Let's, if you have your data responses in front of you,</v>

01:05:44.470 --> 01:05:45.570
that might be helpful.

01:05:47.737 --> 01:05:49.920
Strictly looking at page seven,

01:05:49.920 --> 01:05:52.700
am I correct that one of the discretionary factors

01:05:52.700 --> 01:05:55.770
you believe to be appropriate is whether the company

01:05:55.770 --> 01:05:58.513
committed an illegal violation that threatens safety.

01:05:59.660 --> 01:06:02.460
<v ->That would be a good criteria to include</v>

01:06:02.460 --> 01:06:04.720
in that exercise of discretion, yes.

01:06:04.720 --> 01:06:07.180
<v ->Another discretionary factor would be</v>

01:06:07.180 --> 01:06:09.540
whether the company committed negligence acts

01:06:09.540 --> 01:06:11.185
that threaten safety, correct?

01:06:11.185 --> 01:06:13.230
(faintly speaking)

01:06:13.230 --> 01:06:15.470
Sure, let me ask the question again.

01:06:15.470 --> 01:06:17.410
Another factor to be considered

01:06:17.410 --> 01:06:20.230
in the exercise of this discretion in your view

01:06:20.230 --> 01:06:22.900
would be whether the company committed negligence acts

01:06:22.900 --> 01:06:24.380
that threaten safety, is that correct?

01:06:24.380 --> 01:06:25.500
<v ->Yeah, what we say here is,</v>

01:06:25.500 --> 01:06:26.400
but, by the way, these are,

01:06:26.400 --> 01:06:29.340
we identify criteria that could be identified.

01:06:29.340 --> 01:06:31.260
Again, these are suggestions to PG&E

01:06:31.260 --> 01:06:33.030
and one of them is whether the company committed

01:06:33.030 --> 01:06:36.790
imprudent or negligent acts that threatened safety.

01:06:36.790 --> 01:06:38.270
<v ->So that's a second factor.</v>

01:06:38.270 --> 01:06:40.390
And the third factor you list is

01:06:40.390 --> 01:06:42.900
whether the company engaged in criminal conduct, correct?

01:06:42.900 --> 01:06:45.567
<v ->That is another potential criterion, yes.</v>

01:06:45.567 --> 01:06:47.170
<v ->And the fourth factor is</v>

01:06:48.720 --> 01:06:50.990
the magnitude of the damage to persons or property

01:06:50.990 --> 01:06:52.720
from the event, correct?

01:06:52.720 --> 01:06:53.553
<v ->Yes.</v>

01:06:53.553 --> 01:06:56.370
<v ->So, those four factors that you've listed</v>

01:06:56.370 --> 01:06:58.360
are not exhaustive, are they?

01:06:58.360 --> 01:07:00.850
<v ->No, in fact as I said, those are criteria</v>

01:07:00.850 --> 01:07:03.100
that we're suggesting that could be included,

01:07:03.100 --> 01:07:05.830
but those are not meant to be an exhaustive list.

01:07:05.830 --> 01:07:07.830
<v ->Are you able to give us an exhaustive list</v>

01:07:07.830 --> 01:07:09.720
of all the factors that should be considered

01:07:09.720 --> 01:07:11.420
in this discretionary determination?

01:07:11.420 --> 01:07:12.930
<v ->Not as I sit here, no.</v>

01:07:12.930 --> 01:07:14.810
<v ->In fact, you would agree that it's impossible</v>

01:07:14.810 --> 01:07:16.750
for us sitting in this room today

01:07:16.750 --> 01:07:19.940
to foresee all the facts and circumstances

01:07:19.940 --> 01:07:21.450
surrounding some future event

01:07:21.450 --> 01:07:23.290
that might appropriately be considered

01:07:23.290 --> 01:07:25.325
in this exercise of discretion.

01:07:25.325 --> 01:07:27.910
<v ->Well, I, maybe, but I don't see that as a reason</v>

01:07:27.910 --> 01:07:31.210
to not have some criteria that bound the discretion,

01:07:31.210 --> 01:07:33.220
again, just as the Commission has criteria

01:07:33.220 --> 01:07:36.050
that bound its discretion in fixing a penalty amount.

01:07:36.050 --> 01:07:39.100
But, yes, there is discretion, but,

01:07:39.100 --> 01:07:41.120
there's some guidance to that,

01:07:41.120 --> 01:07:45.430
some standard to fix the compensation against.

01:07:45.430 --> 01:07:46.530
<v ->Thank you, Mr. Long.</v>

01:07:50.900 --> 01:07:51.970
Nothing further, Your Honor.

01:07:51.970 --> 01:07:52.970
<v Judge>Mr. Bloom.</v>

01:07:54.030 --> 01:07:55.520
<v Mr. Bloom>Good afternoon, Mr. Long.</v>

01:07:55.520 --> 01:07:56.370
<v ->Good afternoon.</v>

01:07:59.480 --> 01:08:02.030
<v Mr. Bloom>In your testimony, you call for</v>

01:08:02.030 --> 01:08:05.330
interventionist measures and commitments

01:08:05.330 --> 01:08:07.850
that are necessary to prevent future occurrences

01:08:07.850 --> 01:08:11.450
of safety failures that have plagued PG&E

01:08:11.450 --> 01:08:13.653
and victimized communities, is that correct.

01:08:14.827 --> 01:08:16.800
<v ->We're saying this an occasion</v>

01:08:16.800 --> 01:08:19.480
for the Commission to maybe be more interventionist

01:08:19.480 --> 01:08:21.680
than it might otherwise be comfortable with.

01:08:22.770 --> 01:08:24.110
<v Mr. Bloom>And when you talk about</v>

01:08:24.110 --> 01:08:26.490
the victimized communities it serves,

01:08:26.490 --> 01:08:28.780
I assume your reference would certainly include

01:08:28.780 --> 01:08:30.333
the wildfire victims.

01:08:33.320 --> 01:08:34.153
<v ->Yes.</v>

01:08:35.340 --> 01:08:39.250
<v ->Can you explain or give a little more detail on what</v>

01:08:39.250 --> 01:08:42.663
the goal is and why do you want interventionist measures?

01:08:44.920 --> 01:08:48.840
<v ->Every word of my testimony is for the purpose</v>

01:08:48.840 --> 01:08:51.373
of trying to get PG&E to be a safer company.

01:08:53.620 --> 01:08:57.760
And we've devoted a lot of time and attention

01:08:57.760 --> 01:09:00.027
to safety-related proceeding at the PUC

01:09:01.640 --> 01:09:06.040
and we think we have some constructive suggestions to offer

01:09:06.040 --> 01:09:10.030
to improve PG&E's ability to operate as a safe utility,

01:09:10.030 --> 01:09:11.863
so that's the perspective of,

01:09:13.250 --> 01:09:14.940
from which we come.

01:09:14.940 --> 01:09:17.210
<v ->And would you agree that</v>

01:09:17.210 --> 01:09:21.430
the goal is to identify problems, issues,

01:09:21.430 --> 01:09:25.600
before they progress to a safety failure

01:09:25.600 --> 01:09:28.263
or some type of catastrophic event or problem.

01:09:29.210 --> 01:09:30.043
<v ->Absolutely.</v>

01:09:30.043 --> 01:09:31.610
What we've learned in the past is that

01:09:31.610 --> 01:09:35.010
there are latent, there can be latent problems

01:09:35.010 --> 01:09:40.010
that are not known that prove catastrophic and I,

01:09:40.210 --> 01:09:43.570
particularly thinking of the San Bruno explosion,

01:09:43.570 --> 01:09:45.740
where there was a, what turned out to be

01:09:46.850 --> 01:09:49.230
an extremely dangerous piece of pipe

01:09:49.230 --> 01:09:51.270
sitting under the community of San Bruno

01:09:51.270 --> 01:09:53.520
that PG&E did not know was in that condition.

01:09:55.010 --> 01:09:57.480
And I'm also thinking about the campfire,

01:09:57.480 --> 01:09:58.420
where there was a

01:10:00.160 --> 01:10:02.310
a hook on a transmission tower that

01:10:03.490 --> 01:10:06.440
needed attention that PG&E did not do anything about.

01:10:06.440 --> 01:10:10.590
<v ->So, would I be correct in categorizing or,</v>

01:10:10.590 --> 01:10:14.800
your proposals, the ideas to minimize the risk

01:10:14.800 --> 01:10:17.460
of a safety failure that would result in

01:10:17.460 --> 01:10:19.660
similar harm to communities.

01:10:19.660 --> 01:10:20.493
<v ->Certainly.</v>

01:10:21.510 --> 01:10:25.940
<v ->And would you accept that the existence</v>

01:10:25.940 --> 01:10:29.080
of the intervention strategies

01:10:29.080 --> 01:10:31.870
or intervention measures that you met,

01:10:31.870 --> 01:10:36.870
that you set forth, could provide at least some

01:10:36.890 --> 01:10:40.070
piece of mind to victims of the fires

01:10:40.070 --> 01:10:43.310
that there's a system in place to identify things

01:10:43.310 --> 01:10:47.640
and hopefully minimize the risk of a future

01:10:47.640 --> 01:10:49.330
catastrophic event or other harm

01:10:49.330 --> 01:10:51.113
that they might be exposed to.

01:10:52.040 --> 01:10:54.340
<v ->Well, I hope everything that PG&E suggests</v>

01:10:54.340 --> 01:10:57.000
and the additional measures that we suggest

01:10:57.000 --> 01:10:58.630
can give us a little more confidence

01:10:58.630 --> 01:11:01.080
that the utility will operate more safely

01:11:01.080 --> 01:11:02.363
than it has in the past.

01:11:04.630 --> 01:11:07.063
And again, that's the goal.

01:11:08.270 --> 01:11:11.610
I also say that I'm not confident,

01:11:11.610 --> 01:11:13.600
based on what I've seen from PG&E and,

01:11:13.600 --> 01:11:16.700
that even TURN's own recommended measures

01:11:16.700 --> 01:11:18.210
are ultimately going to do the job

01:11:18.210 --> 01:11:19.750
because it depends very much on

01:11:19.750 --> 01:11:21.520
how they are implemented by a company

01:11:21.520 --> 01:11:23.630
that does not have a good track record.

01:11:23.630 --> 01:11:27.450
And, so that's why I suggest that the Commission

01:11:27.450 --> 01:11:30.490
hold over the utility, the potential for revocation

01:11:30.490 --> 01:11:32.950
of its CPCN as something that

01:11:32.950 --> 01:11:35.110
will hopefully focus PG&E's

01:11:37.290 --> 01:11:41.800
collective minds and efforts even more sharply than

01:11:41.800 --> 01:11:43.110
they have been in the past.

01:11:43.110 --> 01:11:45.310
<v ->So leaving aside whether we agree</v>

01:11:46.200 --> 01:11:48.590
CPCN or whatever might be it,

01:11:48.590 --> 01:11:51.040
be on the table or not,

01:11:51.040 --> 01:11:54.200
you call on your testimony for what you

01:11:54.200 --> 01:11:56.700
call transformational change that's needed

01:11:56.700 --> 01:12:00.280
and you identify that the most significant measure

01:12:00.280 --> 01:12:02.010
that would reflect such change

01:12:02.010 --> 01:12:05.880
is the regionalization concept or the plan that,

01:12:05.880 --> 01:12:07.960
at this point, is not been developed or

01:12:07.960 --> 01:12:09.822
brought to the Commission, is that correct?

01:12:09.822 --> 01:12:10.926
<v ->I--</v>

01:12:10.926 --> 01:12:13.843
(faintly speaking)

01:12:16.800 --> 01:12:17.633
<v ->Sure.</v>

01:12:20.200 --> 01:12:22.561
I collected, put down the page note on that one.

01:12:22.561 --> 01:12:23.630
The other ones I didn't.

01:12:23.630 --> 01:12:26.223
Let me just give it to you real quick.

01:12:26.223 --> 01:12:28.040
<v ->Based on my table of contents,</v>

01:12:28.040 --> 01:12:29.973
it looks like it's page 25.

01:12:44.500 --> 01:12:46.123
<v ->So, do I--</v>
<v ->Well, I, I've,</v>

01:12:46.123 --> 01:12:50.360
<v ->Ask the question?</v>
<v ->I think what I state is that</v>

01:12:51.990 --> 01:12:54.040
maybe there's another place where I addressed it as well,

01:12:54.040 --> 01:12:56.740
but I think what I stated is that of,

01:12:56.740 --> 01:13:01.740
of the measures that PG&E has identified as initiatives

01:13:02.920 --> 01:13:05.640
that it's, arrived at in its consultations

01:13:05.640 --> 01:13:08.052
with the governor's office,

01:13:08.052 --> 01:13:11.540
this one, the regionalization initiative

01:13:11.540 --> 01:13:14.340
has the potential to be

01:13:15.210 --> 01:13:18.293
closer to transformative than anything else that I see.

01:13:19.420 --> 01:13:22.430
However, on page 25, I say that,

01:13:22.430 --> 01:13:23.660
just as you said in your question,

01:13:23.660 --> 01:13:26.610
it's very much undeveloped and it's very hard to tell

01:13:26.610 --> 01:13:27.883
whether it will indeed,

01:13:29.150 --> 01:13:30.960
how transformative it would really be

01:13:30.960 --> 01:13:32.341
until we see the details

01:13:32.341 --> 01:13:33.931
and whether it will work out the right way.

01:13:33.931 --> 01:13:36.250
<v ->And just for the clarity of the record, I,</v>

01:13:36.250 --> 01:13:37.730
I did have it highlighted.

01:13:37.730 --> 01:13:39.343
So on page two when you say,

01:13:40.680 --> 01:13:43.290
quote, "Probably the most significant

01:13:43.290 --> 01:13:45.340
of the measures in PG&E's testimony

01:13:45.340 --> 01:13:48.600
is the regionalization concept, but that is not yet

01:13:48.600 --> 01:13:50.470
a concrete proposal that can be assessed

01:13:50.470 --> 01:13:53.300
for its ability to improve the safety of PG&E operations."

01:13:53.300 --> 01:13:56.200
So that's the sentence I was referring to is on page two.

01:13:56.200 --> 01:13:57.033
<v ->Thank you.</v>

01:13:58.180 --> 01:14:00.560
<v ->So, just so I can understand,</v>

01:14:00.560 --> 01:14:03.760
since we all understand, not just from you, frankly,

01:14:03.760 --> 01:14:07.510
but from a lot of the testimony from the utilities

01:14:07.510 --> 01:14:10.630
as well as from the, in the reply testimony,

01:14:10.630 --> 01:14:14.040
that the regionalization concept has not been developed

01:14:14.040 --> 01:14:17.070
or bought to the Commission and there were proposals

01:14:17.070 --> 01:14:19.190
that'll be brought in the future,

01:14:19.190 --> 01:14:20.730
maybe in the next general rate case

01:14:20.730 --> 01:14:22.100
is part of that filing and

01:14:22.100 --> 01:14:25.340
we've had testimony that may take a year or two or more

01:14:25.340 --> 01:14:28.030
to implement and then a while to figure out.

01:14:28.030 --> 01:14:29.500
Could you tell us what

01:14:30.810 --> 01:14:32.900
TURN is looking for in terms of

01:14:34.120 --> 01:14:35.600
what happens in the meantime,

01:14:35.600 --> 01:14:37.810
where do we go in terms of

01:14:37.810 --> 01:14:39.950
the short term versus longer term and

01:14:39.950 --> 01:14:42.920
particularly in light of the need for the Commission

01:14:42.920 --> 01:14:45.740
to approve a plan or to reach its decision in this

01:14:45.740 --> 01:14:47.143
in the next 60 days.

01:14:48.430 --> 01:14:49.950
<v ->That's what my testimony speaks to.</v>

01:14:49.950 --> 01:14:52.040
I'm not gonna, I'm not going to restate everything

01:14:52.040 --> 01:14:54.840
in my testimony, but we make a number of recommendations

01:14:55.924 --> 01:14:59.140
in my testimony that we hope will improve

01:15:01.920 --> 01:15:04.640
the ability of PG&E to operate safely.

01:15:04.640 --> 01:15:07.150
We will also be speaking on,

01:15:07.150 --> 01:15:09.430
in our pleading on May 13th to the

01:15:09.430 --> 01:15:11.560
Assigned Commissioner Ruling proposals.

01:15:11.560 --> 01:15:15.270
So, we're going to be, my testimony addresses that

01:15:15.270 --> 01:15:16.460
we're gonna be further addressing it

01:15:16.460 --> 01:15:18.050
in our brief and in our comments.

01:15:18.050 --> 01:15:20.930
<v ->So just to be clear, you're not proposing that</v>

01:15:20.930 --> 01:15:24.260
this be held back until this restructuring proposal

01:15:24.260 --> 01:15:27.370
has brought to the Commission, considered, enrolled on.

01:15:27.370 --> 01:15:29.440
There's a number of other interim things that

01:15:29.440 --> 01:15:32.060
you may or may not propose and the Commission may adopt,

01:15:32.060 --> 01:15:35.560
but, the one that's--
<v ->I'm sorry, what,</v>

01:15:35.560 --> 01:15:37.960
you used this there and I didn't know

01:15:37.960 --> 01:15:38.820
what you meant by this,

01:15:38.820 --> 01:15:39.860
so maybe you could start

01:15:39.860 --> 01:15:40.950
your question again
<v ->Your propose--</v>

01:15:40.950 --> 01:15:43.450
you are not proposing in this proceeding that

01:15:43.450 --> 01:15:46.080
the decision of the Commission be held back

01:15:46.080 --> 01:15:48.810
in terms of compliance with AB 1054

01:15:48.810 --> 01:15:51.510
until that restructuring organizational plan

01:15:51.510 --> 01:15:54.860
has been brought to the Commission and sided upon.

01:15:54.860 --> 01:15:56.570
<v ->No, that is not our proposal.</v>

01:15:56.570 --> 01:15:59.410
<v ->Okay, I have no further questions, Your Honor.</v>

01:15:59.410 --> 01:16:00.470
<v Judge>Thank you, Mr. Bloom.</v>

01:16:00.470 --> 01:16:02.830
I believe there's no further cross--

01:16:02.830 --> 01:16:04.430
Mr. Abrams.

01:16:04.430 --> 01:16:06.260
<v ->Sorry, very quickly, if I can take three minutes,</v>

01:16:06.260 --> 01:16:07.830
Your Honor.

01:16:07.830 --> 01:16:09.050
<v Judge>Three minutes is fine.</v>

01:16:09.050 --> 01:16:09.883
<v ->Thank you.</v>

01:16:11.050 --> 01:16:15.630
Would you agree, Mr. Long, that any use of victims

01:16:15.630 --> 01:16:20.630
or the Victim's Trust to adversely affect rates

01:16:21.090 --> 01:16:22.890
should be avoided by the Commission?

01:16:25.710 --> 01:16:27.403
<v Mr. Weisman>Objection, beyond the scope.</v>

01:16:28.460 --> 01:16:29.830
<v ->It's related--</v>

01:16:29.830 --> 01:16:32.050
<v Judge>Can you, I'm not clear exactly</v>

01:16:32.050 --> 01:16:33.800
what you're asking, Mr. Abrams.

01:16:33.800 --> 01:16:36.423
I mean, it seems, it seems like,

01:16:37.600 --> 01:16:38.960
knowing the business of TURN,

01:16:38.960 --> 01:16:41.800
that I think you have, essentially,

01:16:41.800 --> 01:16:43.610
the answer's gonna be, if he understood it,

01:16:43.610 --> 01:16:44.570
would be no and no.

01:16:44.570 --> 01:16:46.620
It's like, he doesn't want to harm victims

01:16:46.620 --> 01:16:49.730
and he doesn't want to increase rates, so,

01:16:49.730 --> 01:16:52.970
I'm not sure what you're trying to get with that question.

01:16:52.970 --> 01:16:55.653
Can you try and refocus or rephrase.

01:16:56.940 --> 01:16:57.773
<v ->Sure.</v>

01:17:02.330 --> 01:17:07.330
To whatever extent that the plan of reorganization

01:17:09.360 --> 01:17:12.740
leverages the victims and the Victim's Trust

01:17:14.010 --> 01:17:18.060
to adversely affect rates

01:17:18.060 --> 01:17:20.700
is in the purview of the Commission,

01:17:20.700 --> 01:17:24.203
and should be avoided through the plan of reorganization.

01:17:26.360 --> 01:17:29.403
<v ->Well, let me try to answer your question this way.</v>

01:17:37.620 --> 01:17:39.400
The fact that the plan

01:17:41.150 --> 01:17:46.150
has wildfire survivors, victims, whatever word we use,

01:17:47.780 --> 01:17:49.980
becoming shareholders of the company

01:17:54.660 --> 01:17:57.750
could lead to a situation in which

01:17:59.250 --> 01:18:01.630
arguments are made by PG&E that

01:18:02.600 --> 01:18:06.040
if, for example, TURN seeks a disallowance

01:18:07.840 --> 01:18:10.090
based on imprudence that

01:18:11.000 --> 01:18:13.700
TURN's recommendation should be ejected

01:18:13.700 --> 01:18:16.740
because it would be harmful to

01:18:16.740 --> 01:18:18.570
not just the general body of shareholders,

01:18:18.570 --> 01:18:20.807
but to this new group of shareholders,

01:18:20.807 --> 01:18:22.253
the wildfire victims.

01:18:23.650 --> 01:18:24.610
That's something that,

01:18:24.610 --> 01:18:26.240
if the Commission approves this plan,

01:18:26.240 --> 01:18:29.133
that should be very attentive to that.

01:18:32.720 --> 01:18:34.740
That should not be an additional factor

01:18:34.740 --> 01:18:36.480
that weighs on a scale of

01:18:38.250 --> 01:18:41.313
the Commission's determinations about whether to,

01:18:43.320 --> 01:18:45.680
the Commission's determinations in setting,

01:18:45.680 --> 01:18:48.800
meaning its statutory obligation of ensuring

01:18:48.800 --> 01:18:50.393
just and reasonable rates.

01:18:51.430 --> 01:18:53.440
<v ->Thank you, thank you, Your Honor.</v>

01:18:53.440 --> 01:18:55.000
<v Judge>Thank you, Mr. Abrams.</v>

01:18:55.000 --> 01:18:56.083
Any redirect?

01:18:57.160 --> 01:19:00.147
<v Mr. Weisman>No, Your Honor, thank you.</v>

01:19:00.147 --> 01:19:02.210
<v Judge>Thank you Mr. Long, you are excused.</v>

01:19:02.210 --> 01:19:03.043
<v ->Thank you.</v>

01:19:04.670 --> 01:19:06.350
<v ->My understanding is this completes</v>

01:19:06.350 --> 01:19:09.893
the cross examination, am I correct?

01:19:11.000 --> 01:19:12.450
I see nods.

01:19:12.450 --> 01:19:13.980
I don't see anyone telling my I'm wrong.

01:19:13.980 --> 01:19:15.623
So, thank you everyone.

01:19:16.490 --> 01:19:19.610
Let's, let's move into housekeeping.

01:19:19.610 --> 01:19:23.510
I think we have exhibits to move into the record.

01:19:23.510 --> 01:19:25.320
Why don't we start

01:19:25.320 --> 01:19:26.413
Mr. Finkelstein.

01:19:28.370 --> 01:19:29.203
<v Mr. Finkelstein>Sure, Your Honor,</v>

01:19:29.203 --> 01:19:31.903
I'd like to start with the documents

01:19:31.903 --> 01:19:33.710
that we just, the subject of

01:19:33.710 --> 01:19:37.300
Mr. Long's testimony and cross examinations.

01:19:37.300 --> 01:19:39.980
That would be, what's your preference,

01:19:39.980 --> 01:19:42.767
one at a time, can I list three that were--

01:19:43.670 --> 01:19:45.000
<v ->Well I think, so what I have,</v>

01:19:45.000 --> 01:19:46.300
let's make sure we correspond.

01:19:46.300 --> 01:19:48.870
I have TURN one, which is the

01:19:48.870 --> 01:19:51.910
prepared reply testimony of Thomas Long.

01:19:51.910 --> 01:19:55.410
TURN one A, previously marked which is the attachments

01:19:55.410 --> 01:19:57.723
to the prepared testimony of Thomas Long.

01:19:58.730 --> 01:20:03.080
TURN one E, the errata to prepared testimony

01:20:04.900 --> 01:20:09.260
and TURN two, TURN responses to PG&E data requests.

01:20:09.260 --> 01:20:11.310
This is separate from any cross exhibits.

01:20:12.470 --> 01:20:16.910
Did I identify those non-cross exhibits accurately?

01:20:16.910 --> 01:20:17.743
<v ->Yes.</v>

01:20:17.743 --> 01:20:18.576
<v ->Okay.</v>

01:20:18.576 --> 01:20:21.240
And, I take it you wish to move those into the record.

01:20:21.240 --> 01:20:22.170
<v ->Yes, please.</v>

01:20:22.170 --> 01:20:24.600
<v ->Is there any objection to the receipt of</v>

01:20:24.600 --> 01:20:29.600
TURN one, TURN one A, TURN one E or TURN two?

01:20:31.040 --> 01:20:34.173
Seeing none, those exhibits are admitted.

01:20:37.420 --> 01:20:40.363
Mr. Finkelstein, I assume there are other exhibits as well.

01:20:41.610 --> 01:20:43.000
<v ->There are, Your Honor,</v>

01:20:43.000 --> 01:20:43.833
and they will prepare,

01:20:43.833 --> 01:20:46.020
your attorney would've had a list.

01:20:46.020 --> 01:20:47.253
There is certainly.

01:20:49.900 --> 01:20:50.750
<v ->Off the record.</v>

01:20:53.645 --> 01:20:56.562
(faintly speaking)

01:21:08.950 --> 01:21:09.802
So we're off the record,

01:21:09.802 --> 01:21:11.213
let's stay off the record, it's fine.

01:21:12.780 --> 01:21:13.910
<v ->I was gonna go to</v>

01:21:13.910 --> 01:21:18.570
the TURN, EPUC, IS testimony,

01:21:18.570 --> 01:21:19.430
which is

01:21:20.570 --> 01:21:24.153
at acronym one and one A.

01:21:25.158 --> 01:21:27.241
(coughs)

01:21:28.160 --> 01:21:31.077
(faintly speaking)

01:21:49.566 --> 01:21:50.899
<v ->On the record.</v>

01:21:52.070 --> 01:21:54.570
<v ->And return would also move for</v>

01:21:54.570 --> 01:21:57.100
introduction into the record of,

01:21:57.100 --> 01:22:01.437
what's been marked as TURN, EPUC, IS one

01:22:02.480 --> 01:22:07.300
and TURN, EPUC, IS one A,

01:22:07.300 --> 01:22:10.550
one being the prepared testimony of Albert Finkelstein

01:22:10.550 --> 01:22:13.600
and one A being the attachments there, too.

01:22:13.600 --> 01:22:15.330
<v Judge>Is there any objection to the receipt of</v>

01:22:15.330 --> 01:22:17.970
TURN, EPUC, IS one or one A.

01:22:19.090 --> 01:22:21.423
Seeing none, those exhibits are admitted.

01:22:22.550 --> 01:22:24.060
Thank you, Mr. Finkelstein.

01:22:24.060 --> 01:22:26.190
<v ->Well, Your Honor, I think that TURN has</v>

01:22:26.190 --> 01:22:29.380
some number of cross examination exhibits pending

01:22:29.380 --> 01:22:32.620
that, if we can do those as well, now.

01:22:32.620 --> 01:22:35.410
<v Judge>Let's do that, I have a list.</v>

01:22:35.410 --> 01:22:36.560
<v ->It'd be very helpful.</v>

01:22:40.480 --> 01:22:43.116
<v ->Actually, Ms. Herbert has maintained the list.</v>

01:22:43.116 --> 01:22:44.120
(laughs)

01:22:44.120 --> 01:22:45.642
<v Mr. Finkelstein>We saw right through that, Your Honor.</v>

01:22:45.642 --> 01:22:46.960
(laughs)

01:22:46.960 --> 01:22:48.800
<v ->Well, I do have the list.</v>

01:22:48.800 --> 01:22:50.676
I didn't say I made the list.

01:22:50.676 --> 01:22:53.350
(chuckles)

01:22:53.350 --> 01:22:55.120
Am I on the record?

01:22:55.120 --> 01:22:56.560
Okay.

01:22:56.560 --> 01:22:57.393
Okay, that's fine.

01:22:57.393 --> 01:22:58.659
I just couldn't--

01:22:58.659 --> 01:23:01.550
(laughs)

01:23:01.550 --> 01:23:03.410
On the record.

01:23:03.410 --> 01:23:06.963
In terms of TURN cross examination exhibits,

01:23:09.400 --> 01:23:13.840
TURN X two, we've already marked as received,

01:23:13.840 --> 01:23:15.380
so the ones that have not been received

01:23:15.380 --> 01:23:20.380
are TURN X three, X four, X five, X six,

01:23:21.000 --> 01:23:24.173
X seven, X eight and X nine.

01:23:28.230 --> 01:23:29.780
Is there any party who wishes me

01:23:29.780 --> 01:23:32.250
to identify those specifically or

01:23:32.250 --> 01:23:33.850
is there any objection to the receipt

01:23:33.850 --> 01:23:35.393
of any of those exhibits.

01:23:37.354 --> 01:23:38.340
<v Mr. Weisman>Would you be so kind,</v>

01:23:38.340 --> 01:23:39.360
I just wanna make sure--

01:23:39.360 --> 01:23:40.660
<v ->Let's go off the record.</v>

01:23:41.713 --> 01:23:42.950
(coughs)
That's fine.

01:23:42.950 --> 01:23:43.930
<v Mr. Weisman>I just wanna make sure</v>

01:23:43.930 --> 01:23:45.020
that my record is correct.

01:23:45.020 --> 01:23:50.020
TURN X eight was a data request response.

01:23:50.380 --> 01:23:52.823
<v ->Right, TURN data</v>
<v Man>16 dash one.</v>

01:23:52.823 --> 01:23:53.656
<v ->What's that?</v>

01:23:53.656 --> 01:23:55.127
<v Man>It was 16 dash one.</v>

01:23:55.127 --> 01:23:57.693
<v ->16 dash one and 16 dash two.</v>

01:24:01.860 --> 01:24:03.303
<v Mr. Weisman>Yeah, I don't have it.</v>

01:24:04.470 --> 01:24:07.810
Sorry, did you also admit,

01:24:07.810 --> 01:24:09.477
is there a TURN X one that was--

01:24:10.560 --> 01:24:12.720
<v ->No, I think I had probably some sort of a</v>

01:24:12.720 --> 01:24:15.760
numbering system hiccup because I don't always do things

01:24:15.760 --> 01:24:17.033
completely consistently.

01:24:20.120 --> 01:24:22.130
So I, yeah, the ones that are still outstanding

01:24:22.130 --> 01:24:25.383
are X three through X nine.

01:24:28.470 --> 01:24:29.550
So,
<v ->Yeah.</v>

01:24:29.550 --> 01:24:30.960
<v ->Okay.</v>

01:24:30.960 --> 01:24:32.143
On the record.

01:24:33.060 --> 01:24:35.780
I see no objection to the admission of

01:24:35.780 --> 01:24:40.780
TURN X three through X nine, and so those will be admitted.

01:24:41.770 --> 01:24:42.800
<v Mr. Finkelstein>Thank you, Your Honor.</v>

01:24:42.800 --> 01:24:43.633
<v ->Thank you.</v>

01:24:53.340 --> 01:24:56.530
Mr. Finkelstein, are there any other exhibits for TURN

01:24:58.448 --> 01:24:59.760
that you know of?

01:24:59.760 --> 01:25:00.850
<v ->Not that I know of, Your Honor.</v>

01:25:00.850 --> 01:25:03.960
<v ->Okay, thank you, off the record.</v>

01:25:03.960 --> 01:25:06.510
Who has, let's say we'll get to PG&E at some point.

01:25:07.570 --> 01:25:11.013
So we have City and County of San Francisco and Mr. Miley.

01:25:13.580 --> 01:25:15.630
Yours is there already and

01:25:15.630 --> 01:25:17.993
yours is already in, okay.

01:25:20.690 --> 01:25:23.840
Mr. Bloom, you don't have any exhibits, right?

01:25:23.840 --> 01:25:24.673
Okay.
<v Mr. Bloom>No, Your Honor.</v>

01:25:24.673 --> 01:25:28.400
<v ->And then Mr. Abrams, you have a bunch of exhibits,</v>

01:25:28.400 --> 01:25:31.580
do you have exhibits to move into the record, I believe

01:25:31.580 --> 01:25:33.080
or no.

01:25:33.080 --> 01:25:35.840
I think there's probably your original testimony, right.

01:25:35.840 --> 01:25:36.673
<v ->There's,</v>

01:25:38.131 --> 01:25:40.640
sorry Your Honor, I'm not sure the procedure here,

01:25:40.640 --> 01:25:44.980
but yes, my original testimony, I had 10 exhibits

01:25:46.410 --> 01:25:48.163
as well as my,

01:25:49.460 --> 01:25:50.513
that were provided.

01:25:56.250 --> 01:26:00.470
And I had opening testimony that leveraged as an exhibit

01:26:00.470 --> 01:26:02.463
as well as my reply testimony.

01:26:07.051 --> 01:26:09.468
(whispering)

01:26:59.300 --> 01:27:02.120
<v ->So what I have is</v>

01:27:03.190 --> 01:27:05.950
the numbering is slightly odd, but what I have is

01:27:05.950 --> 01:27:10.950
Abrams one and Abrams six, which are not marked

01:27:12.020 --> 01:27:15.610
as cross examination exhibits that are Abrams' testimony

01:27:16.460 --> 01:27:18.500
and then I have cross examination exhibits

01:27:18.500 --> 01:27:22.440
X two, X three, X four, X five

01:27:23.280 --> 01:27:28.280
and it jumps to X seven, X eight, X nine and X 10.

01:27:30.067 --> 01:27:31.750
(coughs)

01:27:31.750 --> 01:27:35.590
So, do parties need time to look at those

01:27:35.590 --> 01:27:36.907
or are there objections to those?

01:27:36.907 --> 01:27:39.120
<v Mr. Weisman>I will, I have objections to some of those.</v>

01:27:39.120 --> 01:27:40.900
<v ->Okay, then what I'll do is,</v>

01:27:40.900 --> 01:27:43.850
let's loop back to Mr. Abrams after I do

01:27:43.850 --> 01:27:45.290
some of the other ones where I think there might be

01:27:45.290 --> 01:27:46.940
fewer objections, because this one's a little,

01:27:46.940 --> 01:27:48.560
will be a little complicated.

01:27:48.560 --> 01:27:51.573
So, okay, let's do City and County of San Francisco.

01:27:51.573 --> 01:27:53.450
<v Ms. Hong>Oh, before we go back on the record,</v>

01:27:53.450 --> 01:27:57.897
I think MCE and SPUA both had exhibits,

01:27:57.897 --> 01:28:01.080
but I don't see either of their council here this afternoon.

01:28:01.080 --> 01:28:03.420
<v ->So, tell you what, let's,</v>

01:28:03.420 --> 01:28:05.830
what we'll do is let's go through every one we have

01:28:05.830 --> 01:28:09.093
and then, I'll look at the log and see.

01:28:10.730 --> 01:28:11.807
<v ->Yeah, I think no--</v>

01:28:11.807 --> 01:28:14.713
<v Judge>And see what's left over.</v>

01:28:16.642 --> 01:28:17.475
<v ->Okay.</v>

01:28:18.337 --> 01:28:20.843
(laughs)

01:28:20.843 --> 01:28:21.926
Just in case.

01:28:25.326 --> 01:28:26.854
I think Nora's what we're say,

01:28:26.854 --> 01:28:30.720
but I'm not sure about Bette's and Ariel's, yeah.

01:28:30.720 --> 01:28:32.260
<v ->Okay, so let's do the,</v>

01:28:32.260 --> 01:28:33.573
let's do CCSF.

01:28:34.770 --> 01:28:35.780
<v Ms. Hong>Thank you, Your Honor.</v>

01:28:35.780 --> 01:28:36.810
<v ->Let's go--</v>

01:28:36.810 --> 01:28:37.820
<v Ms. Hong>Oh, sorry.</v>

01:28:37.820 --> 01:28:39.440
<v ->On the record.</v>

01:28:39.440 --> 01:28:40.470
Ms. Hong.

01:28:40.470 --> 01:28:41.480
<v Ms. Hong>Thank you, Your Honor.</v>

01:28:41.480 --> 01:28:44.310
At this time, I would like to move for admission

01:28:44.310 --> 01:28:47.323
into the record, the following exhibits.

01:28:48.960 --> 01:28:52.813
What has been marked as exhibit CCSF one,

01:28:54.250 --> 01:28:58.040
the prepared reply testimony of Margaret A. Miele

01:28:58.040 --> 01:29:01.223
on behalf of the City and County of San Francisco.

01:29:02.950 --> 01:29:07.160
What has been marked as CCSF one E,

01:29:07.160 --> 01:29:11.150
errata to prepared reply testimony of Margaret A. Miele

01:29:11.150 --> 01:29:14.123
on behalf of the City and County of San Francisco.

01:29:16.120 --> 01:29:19.443
What has been marked as exhibit CCSF two,

01:29:21.520 --> 01:29:24.690
CCSF's responses to PG&E's data requests

01:29:24.690 --> 01:29:29.150
set CCSF zero zero one exclamation mark,

01:29:29.150 --> 01:29:34.150
questions one through seven, 10 through 14 and 18 and 19.

01:29:35.090 --> 01:29:39.460
And finally, what has been marked as exhibit CCSF three,

01:29:40.710 --> 01:29:43.760
CCSF's responses to PG&E's data requests

01:29:43.760 --> 01:29:47.230
set CCSF zero zero one exclamation mark,

01:29:47.230 --> 01:29:50.960
questions eight and nine and 15 through 17.

01:29:50.960 --> 01:29:51.870
<v ->Thank you, Ms. Hong.</v>

01:29:51.870 --> 01:29:55.600
Is there any objection to the admission of

01:29:55.600 --> 01:30:00.600
exhibits CCSF one, one E, two and three.

01:30:02.090 --> 01:30:06.223
Seeing none, those exhibits are received.

01:30:08.460 --> 01:30:09.950
Thank you, Ms. Hong.

01:30:09.950 --> 01:30:11.043
<v Ms. Hong>Thank you, Your Honor.</v>

01:30:18.720 --> 01:30:19.720
<v Judge>Mr. Miley.</v>

01:30:31.920 --> 01:30:32.753
<v ->Thank you, Your Honor.</v>

01:30:32.753 --> 01:30:35.090
Matt Miley, Public Advocate's Office.

01:30:35.090 --> 01:30:37.290
Public Advocate's Office requests that

01:30:37.290 --> 01:30:40.140
two exhibits be received into evidence.

01:30:40.140 --> 01:30:43.923
Those have been marked as Cal Advocates X one.

01:30:45.780 --> 01:30:49.320
Those are data request responses.

01:30:49.320 --> 01:30:53.670
The second exhibit is Cal Advocates X two,

01:30:53.670 --> 01:30:57.593
which is an excerpt from PG&E's 10 K form.

01:30:58.960 --> 01:31:00.820
<v ->Is there any objection to the receipt of</v>

01:31:00.820 --> 01:31:04.783
Cal Advocates X one and Cal Advocates X two.

01:31:05.920 --> 01:31:09.233
Seeing none, those exhibits are received.

01:31:16.620 --> 01:31:19.140
Any others whose parties are present

01:31:20.110 --> 01:31:22.453
or do we get to Mr. Abrams and PG&E.

01:31:24.780 --> 01:31:29.050
Let's go ahead and start doing PG&E.

01:31:39.060 --> 01:31:39.893
Off the record.

01:31:48.920 --> 01:31:51.070
I'm gonna start with a pre filed testimony.

01:31:55.000 --> 01:31:55.873
On the record.

01:31:58.610 --> 01:32:01.010
What I have in terms of prepared testimony,

01:32:01.010 --> 01:32:06.010
Mr. Weisman, I have PG&E one, PG&E two, PG&E three,

01:32:08.410 --> 01:32:12.773
PG&E four, PG&E five, PG&E six and PG&E seven.

01:32:16.790 --> 01:32:17.723
We'll get to the,

01:32:18.770 --> 01:32:21.393
we'll get to PG&E eight momentarily.

01:32:22.330 --> 01:32:26.310
And those were prepared testimony from number,

01:32:26.310 --> 01:32:28.180
through number six, number seven was

01:32:28.180 --> 01:32:30.443
supplemental testimony including errata.

01:32:32.600 --> 01:32:35.490
Are there any objections to the receipt of

01:32:35.490 --> 01:32:38.127
PG&E one through PG&E seven.

01:32:39.971 --> 01:32:41.758
Okay, seeing none, and PG&E one

01:32:41.758 --> 01:32:44.203
through PG&E seven are admitted.

01:32:53.400 --> 01:32:54.253
Off the record.

01:33:48.125 --> 01:33:50.870
I'm gonna do another chunk of non-cross numbers,

01:33:50.870 --> 01:33:54.040
so I have, I have eight through,

01:33:54.040 --> 01:33:55.610
PG&E eight through

01:33:57.540 --> 01:33:58.653
15.

01:34:01.480 --> 01:34:04.310
Is anyone gonna have an issue with eight through 15.

01:34:04.310 --> 01:34:05.210
<v ->Only in eight is</v>

01:34:06.165 --> 01:34:07.185
(faintly speaking)

01:34:07.185 --> 01:34:09.268
(laughs)

01:34:13.035 --> 01:34:15.702
A signature on it, February 26th

01:34:17.740 --> 01:34:19.150
Yeah, this one has a signature.

01:34:19.150 --> 01:34:21.320
The official one, here, has the signature block

01:34:21.320 --> 01:34:25.243
dated February 26, 2020, okay.

01:34:28.430 --> 01:34:29.433
On the record.

01:34:31.920 --> 01:34:34.910
We have also previously identified

01:34:34.910 --> 01:34:36.833
PG&E eight, nine,

01:34:38.351 --> 01:34:39.184
10,

01:34:40.489 --> 01:34:41.322
11,

01:34:43.261 --> 01:34:44.094
12,

01:34:45.792 --> 01:34:47.290
13,

01:34:47.290 --> 01:34:49.470
14 and 15

01:34:50.610 --> 01:34:52.870
during an off the record conversation.

01:34:52.870 --> 01:34:54.980
It appears there's no objection to the receipt of those,

01:34:54.980 --> 01:34:56.240
is that correct.

01:34:56.240 --> 01:34:59.863
Any objection to the receipt of PG&E eight through 15.

01:35:01.060 --> 01:35:03.733
Seeing none, those are admitted.

01:35:08.491 --> 01:35:10.433
(coughs)

01:35:10.433 --> 01:35:12.683
(sniffles)

01:35:29.320 --> 01:35:32.930
Then finally, there's PG&E cross examination exhibits.

01:35:32.930 --> 01:35:34.173
PG&E X one,

01:35:36.040 --> 01:35:37.133
X two,

01:35:38.350 --> 01:35:39.493
X three,

01:35:40.840 --> 01:35:41.673
X four,

01:35:43.140 --> 01:35:44.423
X five,

01:35:45.500 --> 01:35:46.993
X six,

01:35:47.860 --> 01:35:49.653
and X seven.

01:35:51.260 --> 01:35:54.330
Is there any objection to the receipt of

01:35:54.330 --> 01:35:59.313
PG&E X one through PG&E X seven.

01:36:00.440 --> 01:36:04.703
Seeing no objection, those are received.

01:36:08.040 --> 01:36:09.700
Any others, Mr. Weisman?

01:36:09.700 --> 01:36:10.793
<v Mr. Weisman>No, Your Honor.</v>

01:36:16.164 --> 01:36:17.776
<v ->Off the record.</v>

01:36:17.776 --> 01:36:20.693
(papers crinkling)

01:36:31.710 --> 01:36:32.570
<v ->Your Honor, while we're off the record,</v>

01:36:32.570 --> 01:36:34.660
you said received, received equals admitted.

01:36:34.660 --> 01:36:35.923
<v ->Yeah.</v>

01:36:35.923 --> 01:36:39.270
My stamp for some reasons says received,

01:36:39.270 --> 01:36:42.372
so things are received, admitted, it's in.

01:36:42.372 --> 01:36:44.455
(laughs)

01:36:46.450 --> 01:36:47.443
Let's see, so,

01:36:48.950 --> 01:36:51.183
any others before we get to Mr. Abrams.

01:36:52.920 --> 01:36:53.753
<v Mr. Weisman>Aren't here.</v>

01:36:53.753 --> 01:36:56.523
<v ->Okay, so, let me look at my log here.</v>

01:36:58.227 --> 01:37:01.144
(faintly speaking)

01:37:05.030 --> 01:37:05.863
That's

01:37:06.950 --> 01:37:09.123
CLICA, okay, let me look through here.

01:37:13.308 --> 01:37:16.225
(papers crinkling)

01:37:28.355 --> 01:37:29.188
(coughs)

01:37:29.188 --> 01:37:31.700
Yeah, CLICA's, CLICA had three and those are all in.

01:37:50.759 --> 01:37:52.600
Yeah, TURN stuff is in.

01:37:52.600 --> 01:37:53.907
Joint CCA, CC--

01:37:58.610 --> 01:38:01.310
Yeah, so looks like there's three exhibits

01:38:01.310 --> 01:38:03.610
from Marine Clean Energy that need to come in.

01:38:07.430 --> 01:38:08.540
Also looks like

01:38:10.010 --> 01:38:12.170
maybe Small Business Utility Advocates

01:38:19.505 --> 01:38:23.255
<v Mr. Weisman>I think it's just their test.</v>

01:38:25.030 --> 01:38:28.243
<v ->They had one cross exhibit on VC,</v>

01:38:29.630 --> 01:38:30.770
so let's do,

01:38:30.770 --> 01:38:33.650
let's look at Marine Clean Energy.

01:38:33.650 --> 01:38:35.433
Do you have something from Marine Clean Energy?

01:38:36.440 --> 01:38:38.340
<v Ms. Herbert>I do, it's right here.</v>

01:38:50.010 --> 01:38:50.953
<v Mr. Weisman>Oh yeah.</v>

01:38:53.060 --> 01:38:56.306
<v ->What I have, then, so we're still off the record.</v>

01:38:56.306 --> 01:38:57.740
What I have from Marine Clean Energy,

01:38:57.740 --> 01:39:00.750
I have three cross examination exhibits.

01:39:00.750 --> 01:39:04.380
Marine Clean energy X one, X two and X three.

01:39:04.380 --> 01:39:05.940
I'm assuming they want them in

01:39:08.090 --> 01:39:09.610
is there gonna be any objection to that?

01:39:09.610 --> 01:39:11.243
Okay, on the record.

01:39:13.060 --> 01:39:15.280
There are three exhibits that were marked for

01:39:15.280 --> 01:39:20.017
Marine Clean Energy, MCE X one, MCE X two and MCE X three.

01:39:24.410 --> 01:39:25.980
Is there any objection to the receipt

01:39:25.980 --> 01:39:28.053
of those three exhibits?

01:39:28.950 --> 01:39:33.410
Seeing none, those three are admitted or received,

01:39:33.410 --> 01:39:37.263
whichever term you prefer, but they are in the record.

01:39:40.320 --> 01:39:41.153
<v Mr. Weisman>Sorry, Your Honor,</v>

01:39:41.153 --> 01:39:42.100
would you be so kind as to

01:39:42.100 --> 01:39:44.350
identify those for the record, I don't have it on--

01:39:44.350 --> 01:39:45.183
<v ->Yes.</v>

01:39:45.183 --> 01:39:48.530
Actually it looks as though X one and X two

01:39:48.530 --> 01:39:51.370
are identified for the record, X three may not have been.

01:39:51.370 --> 01:39:55.960
So, MCE X one is Marine Clean Energy

01:39:55.960 --> 01:40:00.000
cross examination exhibit for witness Wells.

01:40:00.000 --> 01:40:03.400
It's a thick, multi-page document

01:40:07.300 --> 01:40:09.723
and it has a number of attachments.

01:40:12.550 --> 01:40:17.523
It appears to consist of six different documents.

01:40:19.880 --> 01:40:22.610
The second one in MCE X two

01:40:24.000 --> 01:40:27.463
is an excerpt from the PG&E Wildfire Safety Plan,

01:40:29.900 --> 01:40:32.330
which it says

01:40:32.330 --> 01:40:34.110
Pacific Gas and Electric company emended

01:40:34.110 --> 01:40:38.783
2019 Wildfire Safety Plan, February 6, 2019.

01:40:41.860 --> 01:40:43.770
And,

01:40:43.770 --> 01:40:44.953
MCE X three,

01:40:47.210 --> 01:40:50.550
I don't know if this was used or not 'cause

01:40:51.760 --> 01:40:53.760
it doesn't appear to have been identify,

01:40:55.434 --> 01:40:56.850
oh no, it was identified on the record,

01:40:56.850 --> 01:40:59.150
okay, it didn't get marked on here, excuse me.

01:41:01.647 --> 01:41:06.647
MCE X three is

01:41:09.430 --> 01:41:10.263
a

01:41:11.490 --> 01:41:14.140
PG&E data response

01:41:15.990 --> 01:41:18.580
for various witnesses.

01:41:18.580 --> 01:41:23.580
PG&E data response CCSF zero zero one Q zero one dash 36.

01:41:26.830 --> 01:41:27.910
<v Mr. Weisman>Could we be off the record</v>

01:41:27.910 --> 01:41:28.743
for just a moment?

01:41:28.743 --> 01:41:29.650
<v ->Yes, off the record.</v>

01:41:38.898 --> 01:41:40.398
Do we have a SPUA?

01:41:59.380 --> 01:42:00.913
<v ->Yeah, thank you.</v>

01:42:00.913 --> 01:42:02.033
<v ->Okay with all this.</v>

01:42:05.860 --> 01:42:08.300
On the record, just confirming there is no objection

01:42:08.300 --> 01:42:12.450
to the receipt of MCE X one, X two or X three,

01:42:12.450 --> 01:42:13.453
is that correct?

01:42:14.380 --> 01:42:15.983
Those remain received.

01:42:24.990 --> 01:42:26.103
And then,

01:42:38.530 --> 01:42:41.833
there are two exhibits for Small Business Utility Advocates.

01:42:48.860 --> 01:42:53.860
SBUA one is the reply testimony of expert Ted Howard,

01:42:54.540 --> 01:42:57.150
that was the initial testimony,

01:42:57.150 --> 01:43:02.150
and SBUA X two, cross examination hearing exhibit

01:43:02.610 --> 01:43:05.970
entitled PG&E Risk Register.

01:43:05.970 --> 01:43:08.430
Is there any objection to the receipt of

01:43:08.430 --> 01:43:12.113
SBUA one or SBUA X two.

01:43:13.750 --> 01:43:18.133
Seeing none, those two are admitted as well.

01:43:39.487 --> 01:43:40.737
Off the record.

01:43:52.144 --> 01:43:53.311
I didn't mark.

01:43:56.830 --> 01:44:00.130
I believe that completes everyone except for Mr. Abrams,

01:44:00.130 --> 01:44:01.203
is that correct?

01:44:02.840 --> 01:44:03.673
Okay.

01:44:04.650 --> 01:44:07.573
Let's go to Mr. Abrams' exhibits.

01:44:34.430 --> 01:44:36.693
Let me start with, or, on the record.

01:44:37.820 --> 01:44:42.223
Let me stat with exhibits Abrams one and Abrams six.

01:44:43.170 --> 01:44:48.100
So, Abrams one is William B. Abrams' reply testimony,

01:44:48.100 --> 01:44:49.470
dated February 21st.

01:44:52.230 --> 01:44:55.800
Abrams six was the previously-served

01:44:55.800 --> 01:44:57.840
William B. Abrams' opening testimony

01:44:57.840 --> 01:45:01.433
on non-financial issues, dated December 13th, 2019.

01:45:04.360 --> 01:45:07.360
Is there any objection to the receipt of those two exhibits.

01:45:08.420 --> 01:45:13.133
Okay, seeing none, those two exhibits are admitted.

01:45:20.810 --> 01:45:22.500
Off the record.

01:45:22.500 --> 01:45:24.400
Okay, then we have all the cross exhibits,

01:45:24.400 --> 01:45:27.090
so, where there's some that you had concerns over,

01:45:27.090 --> 01:45:28.770
which ones.
<v Mr. Weisman>Yes.</v>

01:45:28.770 --> 01:45:29.603
I do.

01:45:30.474 --> 01:45:33.720
I have, starting with the easy one,

01:45:33.720 --> 01:45:35.970
I have no problem with X five.

01:45:35.970 --> 01:45:38.013
<v Judge>X five, okay.</v>

01:45:39.060 --> 01:45:41.833
<v ->I do have objections to X two, X three, X four.</v>

01:45:43.180 --> 01:45:44.847
<v ->Can he explain what those are, please.</v>

01:45:44.847 --> 01:45:46.327
<v ->I will.</v>
<v Judge>Yeah, yeah, we will.</v>

01:45:46.327 --> 01:45:48.430
We'll give everyone a chance to raise all that

01:45:48.430 --> 01:45:49.340
and it'll be on the record.

01:45:49.340 --> 01:45:52.203
<v ->Yeah, X seven, X eight and I have a,</v>

01:45:54.280 --> 01:45:55.113
oh sorry.

01:45:56.150 --> 01:45:57.560
Not X seven.

01:45:57.560 --> 01:46:00.790
And I do have a, I'll say a partial objection to X nine,

01:46:00.790 --> 01:46:03.600
so what I would say this is Sam Liccardo letter.

01:46:03.600 --> 01:46:05.903
I don't mind it being in, 'cause he examined on it,

01:46:05.903 --> 01:46:08.490
so I think for illustrative purposes,

01:46:08.490 --> 01:46:10.160
but as long, I would object to

01:46:10.160 --> 01:46:11.680
being admitted for the truth of the matter

01:46:11.680 --> 01:46:12.690
contained in the letter.

01:46:12.690 --> 01:46:14.790
<v Judge>Okay, so, was X seven,</v>

01:46:14.790 --> 01:46:15.837
you're saying you don't have a problem with X seven?

01:46:15.837 --> 01:46:18.220
<v ->No, I'm sorry, I misspoke, I misspoke.</v>

01:46:18.220 --> 01:46:21.200
I do have an objection, which I'll be happy to articulate on

01:46:21.200 --> 01:46:23.400
X seven and X eight.

01:46:23.400 --> 01:46:26.040
<v ->Okay, so you have objections to</v>

01:46:26.040 --> 01:46:30.113
X two, X three, X four,

01:46:32.020 --> 01:46:33.223
not X five.

01:46:34.390 --> 01:46:37.810
I don't think I have an X, I don't have an X six.

01:46:37.810 --> 01:46:40.570
And then you have an objections to

01:46:40.570 --> 01:46:44.040
X seven and X eight
<v Mr. Weisman>Yeah, yeah.</v>

01:46:44.040 --> 01:46:45.960
<v ->And X nine.</v>

01:46:45.960 --> 01:46:47.420
<v Mr. Weisman>X nine is a partial one.</v>

01:46:47.420 --> 01:46:48.530
<v ->Okay, we'll get to that one.</v>

01:46:48.530 --> 01:46:51.150
So X nine, we'll do separately.

01:46:51.150 --> 01:46:52.070
Actually, we'll probably just,

01:46:52.070 --> 01:46:54.470
we'll just do these one at a time and then X 10.

01:46:58.070 --> 01:46:59.750
<v Mr. Weisman>Yeah, I don't have a problem with X 10.</v>

01:46:59.750 --> 01:47:01.810
<v ->You don't have a problem with X 10, so,</v>

01:47:01.810 --> 01:47:04.903
does anyone have an objection to X five or X 10.

01:47:06.190 --> 01:47:07.523
Okay.

01:47:07.523 --> 01:47:08.617
What I'll do is,

01:47:08.617 --> 01:47:09.717
we'll go on the record

01:47:11.090 --> 01:47:14.650
and I'll admit X five and X 10

01:47:14.650 --> 01:47:15.730
and then we can walk through

01:47:15.730 --> 01:47:17.893
each of the other ones individually, okay.

01:47:20.100 --> 01:47:21.243
On the record.

01:47:23.690 --> 01:47:25.340
Mr. Abrams, I assume that you wish to

01:47:25.340 --> 01:47:27.230
have your exhibits admitted to the record,

01:47:27.230 --> 01:47:28.660
the remaining exhibits.
<v Mr. Abrams>I do.</v>

01:47:28.660 --> 01:47:30.020
I do, Your Honor.

01:47:30.020 --> 01:47:31.100
<v ->Thank you.</v>

01:47:31.100 --> 01:47:36.100
For exhibits Abrams X five and Abrams X 10,

01:47:36.110 --> 01:47:39.273
is there any objection to the receipt of those two exhibits.

01:47:40.250 --> 01:47:43.443
Seeing none, those two are admitted.

01:47:50.250 --> 01:47:51.950
I understand there may be some objections

01:47:51.950 --> 01:47:53.660
to some of the other exhibits,

01:47:53.660 --> 01:47:56.343
so let's walk through those one at a time.

01:47:57.430 --> 01:48:00.380
Is there an objection to Abrams X two.

01:48:00.380 --> 01:48:01.230
<v ->Yes.</v>

01:48:01.230 --> 01:48:02.820
<v Judge>And what is the nature of that objection.</v>

01:48:02.820 --> 01:48:07.100
<v ->Abrams X two is Mr. Abrams' pleading in the bankruptcy</v>

01:48:09.760 --> 01:48:10.593
court

01:48:12.090 --> 01:48:14.270
its a motion for reconsideration.

01:48:14.270 --> 01:48:15.950
So I object on two grounds.

01:48:15.950 --> 01:48:19.720
First, lack of foundation and second,

01:48:19.720 --> 01:48:24.720
I don't recall this exhibit being used in cross examination.

01:48:26.940 --> 01:48:29.780
<v Judge>Mr. Abrams, do you have a response?</v>

01:48:29.780 --> 01:48:32.610
<v ->My response, Your Honor, is that</v>

01:48:32.610 --> 01:48:36.110
the bankruptcy proceeding is the subject

01:48:36.110 --> 01:48:38.110
and the documents associated with that

01:48:38.110 --> 01:48:41.280
are the subject of this proceeding,

01:48:41.280 --> 01:48:44.610
specifically, my pleading talks to

01:48:44.610 --> 01:48:46.430
safety and security issues,

01:48:46.430 --> 01:48:49.870
which are central to the Commission's decision

01:48:49.870 --> 01:48:52.220
and therefore, I think the exhibit

01:48:53.770 --> 01:48:56.960
is rightfully put into the record.

01:48:56.960 --> 01:49:01.080
I also discuss that, even though I did not reference

01:49:01.080 --> 01:49:03.800
specific line items within that,

01:49:03.800 --> 01:49:08.413
I did reference those arguments in my cross examination.

01:49:09.500 --> 01:49:12.750
<v Judge>Am I correct that this document</v>

01:49:12.750 --> 01:49:16.580
is a motion that you filed in the Bankruptcy Court

01:49:16.580 --> 01:49:18.470
and accordingly, are, essentially,

01:49:18.470 --> 01:49:21.383
arguments that you are making in the Bankruptcy Court.

01:49:22.980 --> 01:49:25.090
<v ->They are arguments that I am making</v>

01:49:25.090 --> 01:49:29.690
in the Bankruptcy Court that are also

01:49:29.690 --> 01:49:32.870
the arguments of PG&E are making in the Bankruptcy Court.

01:49:32.870 --> 01:49:35.290
They are arguments that victims are making

01:49:35.290 --> 01:49:36.610
in the Bankruptcy Court.

01:49:36.610 --> 01:49:38.740
It is amongst many arguments that are in

01:49:38.740 --> 01:49:41.640
the Bankruptcy Court that are relevant to this proceeding.

01:49:42.740 --> 01:49:44.580
<v ->Well, Mr. Abrams, much of what happens</v>

01:49:44.580 --> 01:49:46.510
coming out of the Bankruptcy Court

01:49:46.510 --> 01:49:48.730
is relevant to this proceeding.

01:49:48.730 --> 01:49:50.380
This is not a forum to relitigate

01:49:51.440 --> 01:49:53.630
or repeat arguments made in the Bankruptcy Court.

01:49:53.630 --> 01:49:57.813
I am going to not admit exhibit X two.

01:50:02.880 --> 01:50:05.410
Let's move to exhibit X three.

01:50:05.410 --> 01:50:07.263
<v Mr. Weisman>Same objections, your Honor.</v>

01:50:08.250 --> 01:50:09.083
<v Mr. Abrams>Can you specify</v>

01:50:09.083 --> 01:50:11.130
what that X three is, please, first.

01:50:11.130 --> 01:50:12.268
<v ->Yes.</v>

01:50:12.268 --> 01:50:14.390
Williams, excuse me.

01:50:14.390 --> 01:50:17.810
Abrams X three is

01:50:17.810 --> 01:50:21.120
a pleading from the United States Bankruptcy Court.

01:50:21.120 --> 01:50:23.983
William B. Abrams objection to debtor's motion,

01:50:25.740 --> 01:50:29.253
pursue it to 11 USC, et cetera.

01:50:31.250 --> 01:50:33.300
Again, about the restructuring agreement.

01:50:34.670 --> 01:50:37.100
Do you have anything additional to say

01:50:37.100 --> 01:50:39.580
on this specific document.

01:50:39.580 --> 01:50:41.260
<v ->Yes, Your Honor.</v>

01:50:41.260 --> 01:50:45.020
So this motion is directly related

01:50:45.020 --> 01:50:50.020
to the financing of the plan of reorganization,

01:50:50.430 --> 01:50:54.363
which is central to the Commission's decision and

01:50:56.040 --> 01:51:01.040
I disagree strenuously with having only the documents

01:51:02.600 --> 01:51:04.780
and the testimony that PG&E would like to

01:51:04.780 --> 01:51:08.933
take under consideration, rather than those of opponents.

01:51:11.260 --> 01:51:13.380
<v Judge>Well, certainly, Mr. Abrams,</v>

01:51:13.380 --> 01:51:16.950
you have been free to submit testimony and have done so.

01:51:16.950 --> 01:51:21.950
This again is an argument made to the Bankruptcy Court.

01:51:22.810 --> 01:51:27.260
I am not going to admit Abrams X three.

01:51:27.260 --> 01:51:29.693
Let's go to Abrams X four.

01:51:31.260 --> 01:51:32.663
This one is,

01:51:33.610 --> 01:51:35.630
this one is victim letters to court.

01:51:35.630 --> 01:51:37.890
Your objection on this, Mr. Weisman.

01:51:37.890 --> 01:51:40.233
<v Mr. Weisman>Same objections and also hearsay.</v>

01:51:44.790 --> 01:51:49.423
<v ->On this one, this one he did lay a foundation on it and</v>

01:51:52.330 --> 01:51:54.893
there was some discussion of this one.

01:51:55.830 --> 01:52:00.790
I am going to admit this to the record.

01:52:00.790 --> 01:52:04.220
It's not going to get a large amount of weight

01:52:04.220 --> 01:52:06.780
because, as I noticed at the time,

01:52:06.780 --> 01:52:10.500
these are all letters from fire victims to

01:52:10.500 --> 01:52:14.360
Judge Montali in the Bankruptcy Court, so the

01:52:14.360 --> 01:52:19.050
relationship to this proceeding is somewhat attenuated,

01:52:19.050 --> 01:52:23.253
but I will admit exhibit X four to the record.

01:52:25.100 --> 01:52:27.290
<v ->Your Honor, for I can add something to that.</v>

01:52:27.290 --> 01:52:29.313
I don't wanna sell past sold but,

01:52:30.950 --> 01:52:32.690
can I add something to the record?

01:52:32.690 --> 01:52:33.890
<v Judge>On that exhibit?</v>

01:52:33.890 --> 01:52:34.940
<v ->Yes.</v>
<v Judge>No.</v>

01:52:36.360 --> 01:52:38.713
<v ->Let's move on to exhibit X seven.</v>

01:52:44.730 --> 01:52:49.730
Mr. Weisman, your objection to Abrams X seven.

01:52:51.330 --> 01:52:55.150
Yes, X seven is a statement filed in the Bankruptcy Court

01:52:55.150 --> 01:52:56.990
on behalf of Governor Newsom

01:52:58.860 --> 01:53:00.320
regarding the

01:53:03.880 --> 01:53:06.020
submission by the debters.

01:53:06.020 --> 01:53:09.160
So, our objections to this are

01:53:09.160 --> 01:53:11.720
lack of foundation, it's an argument

01:53:11.720 --> 01:53:14.640
to the Bankruptcy Court, similar to

01:53:14.640 --> 01:53:18.610
your treatment of X two and X three.

01:53:18.610 --> 01:53:19.443
Again,

01:53:23.140 --> 01:53:28.140
I believe there was an objection made at the time

01:53:28.470 --> 01:53:31.713
and that objection was sustained, I believe.

01:53:37.021 --> 01:53:38.010
<v ->Your Honor, as you're considering this,</v>

01:53:38.010 --> 01:53:39.780
may I weight in on one aspect to this.

01:53:39.780 --> 01:53:42.130
There are several references in the record,

01:53:42.130 --> 01:53:45.120
particular from this Mr. Thompson's testimony,

01:53:45.120 --> 01:53:48.140
to correspondence from the governor addressing views

01:53:50.050 --> 01:53:51.477
additive at--

01:53:52.527 --> 01:53:55.070
<v ->-ation is in fact provident in this case.</v>

01:53:55.070 --> 01:53:59.377
So I, but, could you at least consider those--

01:54:00.880 --> 01:54:02.050
<v ->I agree</v>

01:54:02.050 --> 01:54:03.680
<v Judge>Hold on a second, I'm sorry, what was it you said?</v>

01:54:03.680 --> 01:54:06.393
I didn't hear what you, last thing you said, Mr. Alcantar.

01:54:07.270 --> 01:54:09.300
<v ->Just the favor of considering those thoughts</v>

01:54:09.300 --> 01:54:10.793
as you consider this exhibit.

01:54:11.900 --> 01:54:12.733
<v Judge>Thank you</v>

01:54:12.733 --> 01:54:15.430
<v ->May I briefly remark that</v>

01:54:15.430 --> 01:54:18.140
I did not object to Abrams X five,

01:54:18.140 --> 01:54:21.120
which was the letter from the governor.

01:54:21.120 --> 01:54:23.310
<v Judge>Okay, thank you, Mr. Abrams.</v>

01:54:23.310 --> 01:54:26.880
<v ->Yes, the objections that are in X seven</v>

01:54:26.880 --> 01:54:29.470
directly reference the

01:54:29.470 --> 01:54:33.543
California Public Utilities Commission's proceedings,

01:54:34.560 --> 01:54:38.110
so I couldn't think of anything more relevant

01:54:38.110 --> 01:54:40.090
than a description of the

01:54:40.090 --> 01:54:44.020
California Public Utility Commission's proceedings

01:54:44.020 --> 01:54:46.600
and as objections to how PG&E

01:54:46.600 --> 01:54:49.603
is conducting themselves in this proceeding.

01:54:50.630 --> 01:54:51.463
<v Judge>Well, Mr. Abrams,</v>

01:54:51.463 --> 01:54:52.810
there are a great many of things

01:54:52.810 --> 01:54:54.740
that reference the Public Utilities Commission

01:54:54.740 --> 01:54:56.510
that do not come into the evidentiary record

01:54:56.510 --> 01:54:57.903
at a particular proceeding.

01:55:00.029 --> 01:55:01.300
(coughs)

01:55:01.300 --> 01:55:05.510
I'm trying to recall, at the time this was offered,

01:55:05.510 --> 01:55:07.930
was this used in cross examination?

01:55:07.930 --> 01:55:08.943
<v ->Yes, it was.</v>

01:55:10.140 --> 01:55:10.993
<v Judge>And,</v>

01:55:12.770 --> 01:55:16.930
I'm not recalling the objection, Mr. Manheim.

01:55:16.930 --> 01:55:17.763
<v ->Yeah, Your Honor.</v>

01:55:17.763 --> 01:55:20.130
I believe ALJ Cook was presiding that day,

01:55:20.130 --> 01:55:23.850
but I objected to the use of the document

01:55:23.850 --> 01:55:26.190
for lack of foundation and for relevance

01:55:26.190 --> 01:55:28.580
and so it's a bankruptcy pleading.

01:55:28.580 --> 01:55:29.980
That objection was sustained,

01:55:29.980 --> 01:55:32.300
there were no questions allowed

01:55:32.300 --> 01:55:34.060
with respect to that document.

01:55:34.060 --> 01:55:35.170
<v ->That's untrue.</v>

01:55:35.170 --> 01:55:38.300
It was not no objections related to that document,

01:55:38.300 --> 01:55:39.500
that was never stated.

01:55:39.500 --> 01:55:41.810
<v Judge>Okay.</v>
<v ->Never stated.</v>

01:55:41.810 --> 01:55:42.643
<v Judge>Let's slow down</v>

01:55:42.643 --> 01:55:44.370
'cause we're still in the record here.

01:55:47.940 --> 01:55:49.660
I'm gonna hold off a moment on X seven.

01:55:49.660 --> 01:55:51.310
We'll come back to that.

01:55:51.310 --> 01:55:54.163
Let's move on to Abrams X eight.

01:55:56.500 --> 01:55:58.870
This is another document.

01:55:58.870 --> 01:56:01.383
This is objection of Governor Gavin Newsom

01:56:02.291 --> 01:56:05.283
to debters emended motion for entry of orders.

01:56:07.210 --> 01:56:10.210
So I guess the same arguments would apply to

01:56:13.320 --> 01:56:16.750
this one, is that correct Mr. Weisman,

01:56:16.750 --> 01:56:19.750
Mr. Alcantar and Mr. Abrams?

01:56:19.750 --> 01:56:20.650
<v ->Yes, Your Honor.</v>

01:56:22.303 --> 01:56:23.770
<v ->Yes, Your Honor</v>

01:56:23.770 --> 01:56:26.530
<v ->And the same foundation that I described before</v>

01:56:26.530 --> 01:56:29.690
regarding X seven applies to this.

01:56:29.690 --> 01:56:32.210
<v Judge>Thank you, so the answer is yes, correct.</v>

01:56:32.210 --> 01:56:34.610
<v ->The answer is yes.</v>

01:56:34.610 --> 01:56:38.840
<v ->Moving to Abrams X nine.</v>

01:56:38.840 --> 01:56:43.723
This is a article by Sam Liccardo.

01:56:47.320 --> 01:56:48.610
Mr. Weisman.

01:56:48.610 --> 01:56:49.443
<v ->Yes, Your Honor.</v>

01:56:49.443 --> 01:56:53.260
This document was used in cross examination of Mr. Wells,

01:56:53.260 --> 01:56:55.900
so we would not object to the admission

01:56:55.900 --> 01:57:00.320
for the limited purpose of setting a context for

01:57:00.320 --> 01:57:05.060
Mr. Wells' questions and answers, but we do object

01:57:05.060 --> 01:57:10.000
to consideration of the substance of the opinions that

01:57:10.890 --> 01:57:14.340
the author of that article set forth,

01:57:14.340 --> 01:57:17.060
hence the author was not present.

01:57:17.060 --> 01:57:19.810
So I think the way that it was presented was

01:57:19.810 --> 01:57:24.790
Mr. Abrams read certain passages and asked

01:57:24.790 --> 01:57:26.610
Mr. Wells if he agreed or disagreed

01:57:26.610 --> 01:57:28.910
and for that limited purpose, we don't object.

01:57:31.130 --> 01:57:33.180
<v ->Given that it is an article,</v>

01:57:33.180 --> 01:57:36.840
the article is, essentially, what it is.

01:57:36.840 --> 01:57:39.963
It is a, essentially, a form of hearsay.

01:57:40.870 --> 01:57:42.680
I will admit it for that purpose.

01:57:42.680 --> 01:57:44.030
It will not be basing

01:57:45.010 --> 01:57:50.000
any factual determinations in this proceeding on, but,

01:57:50.000 --> 01:57:52.840
Abrams X nine is received.

01:57:52.840 --> 01:57:56.963
So that leaves us with Abrams X seven and X eight.

01:57:59.010 --> 01:58:03.597
I am going to admit those for,

01:58:05.740 --> 01:58:10.250
essentially, limited purpose, for background material,

01:58:10.250 --> 01:58:11.810
essentially allowing the grounds

01:58:11.810 --> 01:58:14.970
that Mr. Alcantar has identified.

01:58:14.970 --> 01:58:19.693
So Abrams X seven and Abram X eight are admitted.

01:58:23.000 --> 01:58:25.600
Anything else we need to address

01:58:26.790 --> 01:58:28.310
at this time.

01:58:28.310 --> 01:58:31.340
I am planning to try and issue,

01:58:31.340 --> 01:58:32.823
hopefully soon,

01:58:34.020 --> 01:58:38.300
a written ruling that formalizes the schedule

01:58:38.300 --> 01:58:40.550
for going forward.

01:58:40.550 --> 01:58:42.810
I did rule on that from the bench,

01:58:42.810 --> 01:58:45.880
so that is the schedule going forward.

01:58:45.880 --> 01:58:47.690
The reason for the written ruling would be

01:58:47.690 --> 01:58:50.030
to make sure that it's publicly available

01:58:50.030 --> 01:58:52.230
and that everyone has access to it.

01:58:52.230 --> 01:58:56.080
I do not intend to change that ruling I did from the bench

01:58:56.080 --> 01:58:59.833
that adopts the proposed schedule developed by the parties.

01:59:01.400 --> 01:59:04.163
Is there anything else I need to address today?

01:59:05.740 --> 01:59:06.730
Thank you very much.

01:59:06.730 --> 01:59:08.220
Thank you to all the parties.

01:59:08.220 --> 01:59:09.870
This hearing is adjourned.

01:59:09.870 --> 01:59:10.720
<v Man>Feel better.</v>

01:59:10.720 --> 01:59:11.553
<v ->Thanks.</v>

01:59:14.190 --> 01:59:15.555
Not having to be here will help.

01:59:15.555 --> 01:59:17.638
(laughs)

01:59:18.994 --> 01:59:21.911
(faintly speaking)